Nikola's Settlement With The Feds Won't Be Cheap

Industry News / 1 Comment

The company's legal troubles will soon be over.

Nikola's troubles began a little over a year ago when a short-seller financial firm called Hindenburg Research released a scathing report accusing the EV truck and semi-truck automaker of financial fraud. This happened only two days after the company went public with a $26.3 billion evaluation. A week prior, it announced a major investment deal with GM.

Long story short, the Badger EV truck has been canceled and Nikola founder and former CEO Trevor Milton has been charged with multiple counts of fraud. Nikola the company still survives but it's been forced to undergo significant internal and product changes. But that alone doesn't excuse it from Securities and Exchange Commission (SEC) penalties.

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The company has just announced it's setting aside a $125 million reserve fund for a potential SEC settlement. Where's the money coming from? At least some will be from Milton himself. Nikola says it will seek reimbursement from its founder "for costs and damages in connection with the government and regulatory investigations." A final deal with the feds has not been made but judging by Nikola's statement, it appears this will be happening fairly soon.

"With prospects of an SEC settlement, we're looking forward to resolving the outstanding issues relating to our founder and bringing that chapter to a close and maintaining our focus on delivering trucks to our customers and building the energy, service, and support infrastructure our customers need," said Nikola's new CEO Mark Russell.

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As for Milton, he's still facing separate financial fines and, possibly, jail time. Last July, the SEC's charge sheet accused him of "repeatedly disseminating false and misleading information" on social media platforms and to investors. He pocketed "tens of millions of dollars" from this according to the regulator.

Meanwhile, Nikola continues to move forward with the first batch of 25 new BEV trucks set to be delivered to dealers and customers by the end of this year. It's so far managed to build a network of dealers in 28 states. It also inked a deal for a new joint venture manufacturing facility in Ulm, Germany.


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