Trendy electric truck maker Nikola agreed Tuesday to pay the Securities and Exchange Commission a whopping $125 million to settle charges that it misled investors.
The SEC claimed that the company and its founder and ex-CEO, Trevor Milton, misled investors about its trucks’ capabilities, including by sharing a video of a Nikola truck rolling down a hill to pretend that it was “fully operational.”
The misleading publicity campaign helped Nikola boost its stock price even though the company had not yet taken in a single dollar in revenue, according to the SEC.
“Before Nikola had produced a single commercial product or had any revenues from truck or hydrogen fuel sales, Milton embarked on a public relations campaign aimed at inflating and maintaining Nikola’s stock price,” the SEC said in a Tuesday letter. “Milton misled investors about, among other things, Nikola’s technological advancements, in-house production capabilities, reservation book, and financial outlook.”
The $125 million settlement, which Nikola told investors it was negotiating last month, does not involve the electric truck maker admitting or denying wrongdoing. Milton, who resigned from Nikola in September 2020, was separately charged with federal securities and wire fraud charges this July and has pleaded not guilty.
“This is a very straightforward case. Milton told lies to generate popular demand for Nikola stock,” US Attorney Audrey Strauss told reporters in July.
Nikola has told investors that it will seek reimbursement for the settlement from Milton. The settlement will be paid in $25 million installments every six months, with the first payment due within two weeks, according to the SEC.
Nikola did not immediately respond to a request for comment and Milton could not be reached.
The company first went public through a SPAC deal in the summer of 2020, with its shares rising as high as $65 based on what the SEC claims were Milton’s misleading statements. It has since tanked below $10. Nikola shares were up 3.6 percent at $9.58 during premarket trading early Tuesday.
In addition to electric trucks, Nikola says it’s working on hydrogen fuel cell technology.