Nikola to Pay $125 Million to Settle with SEC

Nikola Corp. Faces Potential $125 Million SEC Penalty

Nikola Corp., a developer of electric trucks, is currently engaged in discussions with the U.S. Securities and Exchange Commission regarding a potential $125 million civil penalty.

This penalty stems from an ongoing investigation into whether the company provided misleading information to investors, as reported during the release of its third-quarter earnings.

Settlement Details and Financial Provisions

The proposed settlement would be paid by Nikola in installments.

Funds for this purpose have already been set aside, anticipating a resolution to the matter, according to the company’s third-quarter earnings report.

Nikola had previously reserved a $125 million loss, estimating the potential contingency as of September 30, 2021, based on the progress of discussions with the SEC in October 2021.

Legal Challenges for Founder Trevor Milton

Separately, Nikola’s founder, Trevor Milton, is actively defending himself against legal charges.

He is facing charges brought by both the SEC – alleging violations of securities law – and a criminal indictment from the U.S. Attorney’s Office, which includes two counts of securities fraud and one count of wire fraud.

Costs Associated with Legal Defense

The company is currently covering Milton’s legal fees, which totaled approximately $12.6 million for the first nine months of the current year.

Nikola intends to seek reimbursement from Milton for these costs, as well as any damages related to the government and regulatory investigations.

As of September’s end, Milton retained ownership of roughly 16% of Nikola’s stock.

A Year of Challenges for Nikola

The past year has presented significant difficulties for Nikola.

Last September, the company experienced a period of optimism following the announcement of a $2 billion strategic partnership with General Motors, which included an 11% stake for the automaker and production arrangements for Nikola’s fuel cell pickup.

However, this partnership was terminated just a month later when GM withdrew after the SEC initiated its investigation, prompted by a report from short-seller Hindenburg Research.