- Nikola will pay $125 million to settle SEC charges that it defrauded investors by misleading them about its products.
- The SEC said the agreement follows its litigation against Nikola co-founder and former CEO Trevor Milton.
- Nikola shares rose following news of the settlement.
Nikola stock rose Tuesday after the EV company agreed to pay $125 million to the US Securities and Exchange Commission to settle charges it defrauded investors by misleading them about its products, business prospects, and technical capabilities.
The startup, which focuses on battery-electric and hydrogen-electric semi trucks, said last month it had set aside that amount in anticipation of a potential settlement with the SEC.
Shares were up 3.6% to $9.58 in premarket trade but have fallen 39% on a year-to-date basis. Nikola went public in June 2020 following a merger with a special purpose acquisition company.
The SEC in a statement Tuesday said the settlement follows its litigation filed against Trevor Milton, Nikola's co-founder and former chief executive. The agency said he embarked on a public relations campaign including tweets and media appearances that was aimed at inflating and maintaining Nikola's stock price — before a single commercial product had been made.
Among its findings, the SEC said Milton misled investors about Nikola's technological advancements, truck reservations and orders, and financial outlook. It also said it found Nikola further misled investors by misrepresenting or omitting material facts about, among other things, the refueling time of its prototype vehicles.
"As the order finds, Nikola Corporation is responsible both for Milton's allegedly misleading statements and for other alleged deceptions, all of which falsely portrayed the true state of the company's business and technology," said Gurbir Grewal, director of the SEC's enforcement division, in a statement. "This misconduct — and the harm it inflicted on retail investors — merits the strong remedies today's settlement provides."
Nikola in a separate statement said under the terms of the resolution that it neither admits nor denies the SEC's findings and that the settlement resolves all government investigations. The company will pay $125 million to the SEC in five installments over two years. The first installment will be paid by the end of this year and the remaining installments will be paid semiannually through 2023.
Nikola said it will continue on its strategy of delivering trucks and building out its hydrogen infrastructure, including dispensing stations.
