The Securities and Exchange Commission (SEC) has announced charges against Trevor R. Milton, the founder, former CEO and former executive chairman of Nikola Corporation, for repeatedly disseminating false and misleading information about Nikola’s products and technological accomplishments. Milton made the statements mostly through social media.
The SEC alleges Milton founded Nikola in 2015 with the primary goal of manufacturing trucks that run on alternative fuels with low or zero emissions, and building an alternative fuel station infrastructure to support them. Milton allegedly helped Nikola raise more than $1 billion in private offerings and go public through a business combination conducted by a SPAC. According to the SEC, during that time and after Nikola was publicly traded, Milton acted as Nikola’s primary spokesperson, appearing regularly on national media and communicating directly with investors through social media. Milton allegedly encouraged investors to follow him on social media to get “accurate information” about the company “faster than anywhere else”.
“Instead, however, Milton allegedly 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,” the SEC said in a release.
Milton allegedly made tens of millions of dollars from the alleged ruse.
“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.”
“We allege 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.”
Milton is charged with violating the anti-fraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934. The SEC seeks a permanent injunction, a conduct-based injunction, an officer and director bar, disgorgement with prejudgment interest, and civil penalties.