Nikola, a one-time Tesla competitor, agrees to pay $125 million to settle SEC charges of defrauding investors; 5 months after founder Trevor Milton was indicted of criminal fraud

We’ve been following the story of Nikola, a one-time Tesla competitor and the maker of zero-emission, hydrogen-powered electric trucks. As we reported back in July, Nikola founder Trevor Milton was charged with three counts of criminal fraud—for “lying about ‘nearly all aspects of the business”—and two counts of securities fraud. However, the company was not charged.

Then in September, the company came under the Securities and Exchange Commission (SEC) and the Department of Justice investigations over securities fraud allegations. The SEC later continues its investigation over a short seller’s claims that the hydrogen-electric truck startup misled investors.

The SEC also added that the electric vehicle automaker violated U.S. securities laws with numerous misleading statements made from March to September 2020 about in-house production capabilities, reservation book, and financial outlook. Fast forward three months later, the hammer finally dropped on the company.

Today, the SEC found that Nikola deceived investors about its products, technical advancements, and commercial prospects for at least seven months last year. As part of the settlement, Nikola agreed to pay $125 million to settle civil charges, according to a report from Reuters. SEC said the proceeds from the penalty will be used to return funds to “victim investors.”

In a statement, the SEC’s enforcement director Gurbir Grewal said:

Nikola “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.”

But Nikola did not admit or deny the SEC’s findings. Instead, the company has agreed to cooperate with ongoing litigation and investigation, the SEC said. Nikola also said in a statement that it will continue to execute its strategy and expand its manufacturing network. The company is seeking reimbursement from Milton for “costs and damages in connection with the government and regulatory investigations.”

Founded in 2014 by Trevor Milton, the Salt Lake City-based company builds heavy-duty transport trucks using hybrid hydrogen-electric powertrains. Named after inventor Nikola Tesla, the company designs and manufactures electric vehicles, vehicle components, energy storage systems, and electric vehicle drivetrains. The company went public in June 2020 via a special purpose acquisition company (SPAC).