Nikola probed by SEC, DOJ over fraud claims

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The share price of EV startup Nikola has been on a tear since May, seeing the company’s market cap grow by the billions (bigger than even Ford’s) despite none of Nikola’s promised vehicles actually going on sale.

But on September 10, a company by the name of Hindenburg Research with short positions against Nikola published a report alleging deception and fraud surrounding the credibility of Nikola’s technology.

Hindenburg Research went as far as to claim Nikola CEO Trevor Milton falsely claimed to have proprietary technology, and that the company used mockups in its promotional videos instead of functioning vehicles.

Nikola refutes the allegations and on Monday issued a rebuttal that includes claims Hindenburg Research made misleading statements designed to manipulate Nikola’s share price.

Trevor Milton

Trevor Milton

The allegations from both sides were serious enough to prompt both the Department of Justice and the Securities and Exchange Commission to probe Nikola.

Citing people familiar with the matter, the Financial Times (subscription required) reported Tuesday that both agencies have been in contact with Nikola to discuss the company and the allegations against it.

The initial report from Hindenburg Research was published just two days after Nikola announced a major deal with General Motors that is expected to close by September 30.

Under the deal, GM is to supply batteries, fuel cells, engineering services and even some production capacity to Nikola. In return, GM would receive benefits from Nikola worth $4 billion over the life of the contract, half of which would come from newly issued shares in Nikola.

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