The federal prosecutor’s office on Thursday brought securities fraud charges against Trevor Milton, the former chairman of the electric car start-up Nikola, the most prominent case against an executive at a company that listed its shares through a merger.
A US Attorney’s indictment in Manhattan accused Milton of misleading investors – especially retail investors – about the battery and hydrogen-powered vehicle technology he was trying to manufacture.
Prosecutors said Mr. Milton used social media, television and podcasts for almost a year to make “false and misleading statements about Nikolas product and technology”.
One such misleading statement, according to the loading document, concerned the company’s Nikola One truck prototype. The prototype didn’t work, contrary to the glowing statements Mr. Milton made about it.
Federal prosecutors and securities regulators began investigating Nikola last fall when an investment firm issued a report questioning their products and some of Mr. Milton’s claims. That company, Hindenburg Research, said the company posted a promotional video suggesting it had a working prototype – but never disclosed that the truck was only moving forward because it was idling down a hill. Mr. Milton resigned a few weeks later.
Nikola went public in June 2020 as part of a $ 700 million merger with a special acquisition company (SPAC) called VectorIQ. SPACs are blank check companies that raise money from investors in the hopes of finding a company with an existing business to buy.
Federal prosecutors claim retail investors were hurt by the sharp decline in the stock that began last summer, but not the company’s early investors, including Mr Milton. Nikolas shares traded at around $ 14 Thursday morning after falling more than $ 65 mid-year last year, a point at which the company had a valuation above that of Ford Motor.
Nikola said in a statement that Mr Milton has not held a stake in the company since he stepped down in September 2020. “Today’s government action is against Mr. Milton individually and not against the company. Nikola worked with the government during the investigation, ”the company said.