In a recent arbitration proceeding, electric and hydrogen-powered heavy truck manufacturer Nikola has been awarded $165 million in reimbursement from its founder and former executive chairman, Trevor Milton. The decision was made by an arbitration panel in New York, as disclosed by Nikola in a filing with the Securities and Exchange Commission. The company sought this reimbursement for “costs and damages arising from actions that were the subject of government and regulatory investigations,” including a settlement with the SEC in December 2021 and associated fines.
Nikola has been awarded
65 million in reimbursement from Trevor Milton in an arbitration proceeding. This decision comes after Milton’s guilty verdict on three counts of fraud and his resignation from Nikola. The company had sought reimbursement for costs and damages arising from government and regulatory investigations. Nikola’s stock experienced a temporary rise after the announcement.
Legal Troubles for Trevor Milton
Trevor Milton had originally pleaded not guilty to charges of securities fraud, which accused him of misleading investors about Nikola’s technological and production capabilities. However, in October 2022, he was found guilty on three out of four counts of fraud. Milton, who had resigned from his role as executive chairman in 2020, had also lost a bid for a new trial in August.
The infamous marketing video released by Nikola, showing an 18-wheeler truck seemingly driving on its own electric power, turned out to be misleading. It was revealed that the truck was, in fact, rolling down a hill. This revelation had a significant impact on Nikola’s stock price and resulted in heavy losses for investors.
SEC Settlement and Impact on Nikola
Nikola had previously settled a civil case with the SEC, agreeing to pay a fine of $125 million in 2021. However, the company did not admit any wrongdoing at that time. The SEC case was related to the misleading marketing claims made by Nikola, including the aforementioned video. Following the successful arbitration proceeding and award of $165 million, Nikola’s stock experienced a temporary rise of over 19% during morning trading, although it later dropped back down.