Federal prosecutors on Thursday filed securities fraud charges in opposition to Trevor Milton, the former chief executive of the electric powered automobile start-up Nikola, the most distinguished case towards an executive with a enterprise that listed its shares on the stock exchange via a merger.
An indictment via the U.S. attorney’s workplace in Manhattan charged Mr. Milton with deceptive traders — in specific retail buyers — about the science for battery and hydrogen powered automobiles it had hoped to manufacture.
Prosecutors stated that for almost a year, Mr. Milton used social media, tv and podcasts to unfold “false and deceptive statements related to Nikola’s product and technology.”
One such deceptive statement, the charging record said, involved the company’s Nikola One long-distance truck prototype. The prototype did now not work, opposite to the glowing statements Mr. Milton made about it.
Federal prosecutors and securities regulators commenced investigating Nikola last fall around the time an investment firm put out a file questioning its merchandise and some of Mr. Milton’s claims. That firm, Hindenburg Research, stated the corporation had put out a promotional video to recommend it had a working prototype — however In no way at was it disclosed the truck was moving ahead solely due to the fact it was rolling down a hill in neutral gear. Mr. Milton resigned a few weeks later.
Nikola went public in June 2020 in a $700 million merger with a unique motive acquisition company, or SPAC, known as VectorIQ. SPACs are blank-check groups that increase cash from traders in the hopes of discovering a company with an existing business to buy.
Federal prosecutors contend that retail traders were hurt through the stock’s sharp drop, which started out last summer, but not early investors in the company, which includes Mr. Milton. Nikola’s shares had been buying and selling at about $14 Thursday morning, after falling from more than $65 in the center of last year, a factor at which the enterprise had a valuation in excess of Ford Motor’s.
Nikola stated in a assertion that Mr. Milton had now not been involved with the enterprise Considering the fact he is resigning in September 2020. “Today’s government actions are against Mr. Milton individually, and not against the company. Nikola has cooperated with the authorities throughout the course of its inquiry,” the company said.