Electric truck developer Nikola Corp. is in talks with the U.S. Securities Exchange Commission to pay a $125 million civil penalty, part of an ongoing probe by the regulator into whether the company mislead investors, the company reported in its third-quarter earnings.
Nikola would pay the settlement in installments, and had earmarked the funds in anticipation of a resolution, the company said in its third quarter earnings results.
Based on the advancement of discussions with the SEC in October 2021, Nikola “reserved a $125 million loss as its best estimate of the contingency in accrued liabilities as of September 30, 2021,” the company’s earnings report said.
Meanwhile, Nikola’s beleaguered founder, Trevor Milton, has been busy with his own criminal defense. He faces two separate charges: one from the SEC, for alleged violations of securities law, and a criminal indictment from the U.S. Attorney’s Office for two counts of securities fraud and one count of wire fraud.
The company continues to pay for his attorney’s fees, which came in at a cost of around $12.6 million for the first nine months of this year. Nikola said that it would seek reimbursement from Milton, “for costs and damages in connection with the government and regulatory investigations.” As of the end of September, he owned around 16% of Nikola stock.
To say that the past financial year has been a struggle for the company would be an understatement. Nikola was flying high last September, when it announced a $2 billion strategic partnership with General Motors that included the automaker taking an 11% stake in the then-startup and production terms for Nikola’s fuel cell pickup (that pickup has since been squashed). But just a month later, GM backed out of the deal, after the SEC opened the investigation following a report from short-seller Hindenburg Research.
The resolution to pay $125 million to the SEC must first be approved by the regulator, Nikola told investors.
Originally published at techcrunch.com