- The Securities and Exchange Commission has charged Trevor Milton, founder, former CEO and former executive chairman of electric truck company Nikola Corporation, for repeatedly disseminating false and misleading information, typically through social media, about the company’s products and technological accomplishments.
- The SEC is seeking to have Milton disgorge the gains he made by misleading investors, pay civil penalties, and prohibit him from serving as an officer or director of a publicly traded company. The complaint alleges that Milton made tens of millions of dollars in personal benefits as a result of his misconduct.
- “Having chosen to promote Nikola through social media, Milton was obligated under the securities laws to communicate completely, accurately and truthfully,” said Gurbir Grewal, director of the SEC’s Division of Enforcement.
Milton helped Nikola raise more than $1 billion in private offerings and go public through a business combination conducted by a special purpose acquisition company (SPAC), VectoIQ.
According to the SEC’s complaint, 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.
The 65-page complaint details dozens of instances in which Milton made claims that he allegedly knew were false based on internal and other communications and documents that contradicted him.
For example, in 2020 he claimed an order for 2,500 trucks was guaranteed, and that the customer was obligated to make good on the purchase, but in the terms of the agreement, the customer was only obligated to complete the purchase under specific conditions, including Nikola meeting performance milestones. In addition, some conditions were outside of Nikola's control.
"Even if Nikola could meet all of those obligations," the SEC said, "Customer A still had the right to cancel its orders without liability or penalty as long as the delivery date was 120 days out. Accordingly, it was false and misleading for Milton to describe this highly contingent and cancellable order as guaranteed, without any qualification."
In another example, Milton created the misleading impression that Nikola created breakthrough battery technology that was on the verge of being deployed into its vehicles. In reality, the company paid $250,000 to license coin-size cell technology created by someone else.
Other areas in which Milton is alleged to have made misleading claims include what it would cost to own a Nicola truck, the development progress of in-house components, and the state of its hydrogen production, among other things.
“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."