The U.S. Securities and Exchange Commission charged Trevor Milton, the founder and former CEO of electric truck maker Nikola, with fraud. The agency said Milton repeatedly provided false and misleading information to investors, which was often communicated to them through social media.
Milton, who founded Nikola in 2015, helped the company go public through a special purpose acquisition company (SPAC). According to the SEC’s complaint, during that time and after Nikola was publicly traded, he acted as Nikola’s primary spokesperson talking to the media and communicating directly with investors through social media.
“Having chosen to promote Nikola through social media, Milton was obligated under the securities laws to communicate completely, accurately, and truthfully,” said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement. “That obligation exists for all public company officials, even those whose companies have only recently entered the public markets through SPAC transactions.”
Milton allegedly encouraged investors to follow him on social media to get “accurate information” about the company “faster than anywhere else.” The SEC alleges Milton used his extensive media platform “to repeatedly mislead investors about, among other things, Nikola’s technological advancements, products, in-house production capabilities, and commercial achievements.”
Among the misleading statements Milton made, detailed in the SEC’s complaint, was falsely claiming “Nikola had developed a ‘game-changing’ battery technology and that Nikola was manufacturing and developing multiple key vehicle components ‘in-house.’”
The complaint also alleges that Milton gained tens of millions of dollars in personal benefits as a result of his misconduct.
“We allege that Milton repeatedly made claims, mostly through social media, that either misstated or far exceeded what Nikola and its products actually did or could do,” said David Peavler, regional director of the SEC’s Fort Worth Regional Office. “Public company officials cannot say whatever they want on social media without regard for the federal securities laws. The same rules apply, and the SEC will hold those who make materially false and misleading statements accountable regardless of the communication channel they use.”
The SEC complaint seeks a permanent injunction, a conduct-based injunction, an officer and director bar, disgorgement with prejudgment interest, and civil penalties.
Separately, U.S. prosecutors criminally charged Milton on Thursday. The indictment alleges that from November 2019 through September 2020, Milton made false and misleading statements about “nearly all aspects of the business” to boost the company’s stock. A grand jury charged him with two counts of securities fraud and one count of wire fraud.
Hans Andreas Starheim/ZERO