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Nikola settles with SEC, agrees to pay $125M fine over 2 years

Company will seek reimbursement from indicted founder Trevor Milton

Nikola has agreed to pay $125 million to the Securities and Exchange Commission over two years to settle a complaint over misstatements. (Photo: Nikola)

Nikola Corp. has agreed to pay $125 million over two years to settle a Securities and Exchange Commission complaint over fraud claims against founder Trevor Milton. 

The electric truck and hydrogen fuel-making startup is seeking to get reimbursed by Milton, who faces trial on criminal fraud charges next April.

The SEC order found that Nikola violated the anti-fraud and disclosure control provisions of federal securities laws. Nikola (NASDAQ: NKLA) neither admitted nor denied wrongdoing in the expected settlement. But the SEC laid out a litany of misdeeds that led to the penalty:

  • Before Nikola had produced a single commercial product, Milton embarked on a public relations campaign aimed at inflating and maintaining Nikola’s stock price. 
  • Milton’s statements in tweets and media appearances falsely gave investors the impression that Nikola had reached certain product and technological milestones. 
  • Milton misled investors about Nikola’s technological advancements, in-house production capabilities, hydrogen production, truck reservations and orders, and financial outlook. 
  • Nikola misled investors by misrepresenting or omitting material facts about the refueling time of its prototype vehicles, the status of its headquarters’ hydrogen station, the anticipated cost and sources of electricity for its planned hydrogen production, and the economic risks and benefits associated with its contemplated partnership with a leading auto manufacturer.

“This misconduct — and the harm it inflicted on retail investors — merits the strong remedies today’s settlement provides,” Gurbir S. Grewal, director of the SEC’s Division of Enforcement, said in a press release.

Nikola agreed to continue cooperating with the SEC’s ongoing litigation and investigation. The order also established a Fair Fund to return the penalty proceeds to victim investors.

Looking ahead

For its part, Nikola is looking ahead following 14 months of scrutiny that began with a scathing report by short seller Hindenburg Research in September 2020, two days after Nikola and General Motors Co. announced a partnership in which GM would have become a contract manufacturer of an electric pickup truck in exchange for 11% ownership in Nikola. 


The partnership and the pickup, which was never seen beyond sketches and computer-generated images, crumbled as Nikola received federal subpoenas and negative publicity cascaded on the company.


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Nikola will pay the $125 million to the SEC in five installments over two years, with the first  installment paid by the end of this year. Remaining installments will be paid semiannually through 2023. The company reserved $125 million in the third quarter to account for the anticipated settlement.

“We are pleased to bring this chapter to a close as the company has now resolved all government investigations,” Nikola said in a statement, appearing to confirm for the first time that it does not expect to be criminally charged as Milton was.

“We will continue to execute on our strategy and vision to deliver on our business plan, including delivering trucks to customers, expanding our manufacturing facilities and our sales and service network, and building out our hydrogen infrastructure ecosystem including hydrogen production, distribution and dispensing stations,” the statement said.

Nikola delivered two preproduction units of its Class 8 battery-electric Tre model to Total Transportation Services Inc. last Friday for testing in drayage use. The company expects to deliver up to 25 models of the Tre, which are missing some final parts because of the supply chain disruption, before the end of the year.

Milton’s battle

Several allegations raised by Hindenburg in its 67-page screed in September 2020 were verified by an internal Nikola investigation and during SEC and Department of Justice investigations.

Milton was indicted on three federal fraud charges on July 29, and is free on $100 million bail. He has sold more than $330 million in company stock since he was indicted but remains Nikola’s largest shareholder.

In filings last week in the U.S. District court for the Southern District of New York, Milton’s attorneys sought to have the charges dismissed based on the government’s use of Milton’s voluminous tweets, interviews and media posts as evidence rather than documents or financial statements typical in cases of securities fraud.

The attorneys wrote, according to Bloomberg, that the government was trying to “criminalize promotional speech about Nikola’s products.” They said many of Milton’s comments were made before Nikola went public in June 2020 in a reverse merger with special purpose acquisition company VectoIQ.

The government claims the material, which Milton’s attorneys are also seeking to reduce in volume, show a pattern of misleading investors and inflating the stock price, which touched $93.99 in June 2020 before beginning a slow but consistent decline. Shares opened Tuesday at $9.41.

“The government’s theory of criminal liability is novel and breathtaking in scope, threatening the core rights protected by the Constitution,” the filings said, according to Bloomberg.

Milton earlier tried unsuccessfully to get his trial moved to either Arizona, where Nikola is based, or to Utah, where Milton lives. He has appealed the decision. His trial is set for April 4, 2022, in New York.

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Click for more FreightWaves articles by Alan Adler.

Alan Adler

Alan Adler is an award-winning journalist who worked for The Associated Press and the Detroit Free Press. He also spent two decades in domestic and international media relations and executive communications with General Motors.