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SEC accuses electric car company of defrauding investors

by | Jan 18, 2022 | Securities Litigation

The United States Securities and Exchange Commission (SEC) recently accused founder and former CEO Trevor Milton of Nikola, an electric car company, of securities violations. The government agency claims Mr. Milton used media appearances to provide investors with misleading information about production capabilities and tech advances as well as reservations and orders.

How did the car company respond?

When faced with these accusations, business leaders generally have two options: fight or settle. In this case, the company decided to settle the claim. This allows Nikola to move forward without admitting that there was any violation of securities laws. In return, it has agreed to pay the SEC $125 million.

Representatives of Nikola also stated that they are seeking reimbursement from Mr. Milton to help cover the cost of the investigation and settlement.

What should business leaders learn from this case?

The investigation is just the beginning. Even though the business itself settled with the SEC, the government is continuing its case against the former founder of the business. The government is taking Mr. Milton to court in April on charges related to this matter.

Even when the business settles the case with the government, new business leadership could attempt to hold the business leader in charge at the time in question personally accountable. As such it is generally wise to retain legal counsel experienced in this niche area of the law to help better ensure your interests are protected until the matter is completely resolved — potentially well after completion of the SEC investigation.

Commercial LitigationSecurities LitigationSEC accuses electric car company of defrauding investors
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