Allegations continue over former CEO of Nikola Corp (NASDAQ: NKLA), Trevor Milton. Mr Milton faces a securities-fraud trial starting on Monday September 12, on allegations that he lied about his company’s development of environmentally friendly fuel cell technology.
The trial is consecutive for the former CEO and is expected to last four or five weeks after getting underway with jury selection on Monday. Trevor Milton has pleaded not guilty.
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The fraud allegations started with the release of the Hindenburg Research report in September 2020 that accused Nikola and its founder Trevor of lying about the technology the company has, calling it an “intricate fraud”.
There were many accusations and one of them was related to a video showing a prototype of one the company’s trucks driving itself. The truth was that the truck was not powering itself but rather rolling down a cliff. The founder denied the report saying it never said the truck was driving itself.
The case resulted in founder Trevor Milton being under investigation by the SEC and the DOJ for lying about every aspect of the business to shareholders. On top of that, several other previous class-action lawsuits filed against Nikola by investors emerged.
The case was closed in December 2021 with Nikola agreeing to pay $125 million to settle charges.
Now as allegations continue, Nikola stock might keep experiencing fluctuations. Since 2020, Nikola stock has lost about 90% from September 2020 highs at $54 when the Hindenburg report came out.
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Even though Mr Milton resigned as a CEO almost immediately, the company was still left to deal with damaged reputation and convictions. For Milton, top charges carry a maximum sentence of 25 years, even though under federal sentencing guidelines he would likely face a much shorter prison term even if convicted on all charges.
For the company, positive developments are happening lately despite the fallout from Milton’s legal troubles. It started production of its first truck model and is still ahead of competitors. It attracts partners, customers and established executives who are betting on its plan for development of a network of long-haul hydrogen trucks.
All in all, investors might decide to look past Mr Milton’s allegations if the company continues to outperform with its technology, progress with production deadlines and commercial prospects.
