ECONOMY

‘Do Something’: Nikola Chief Urged Executives to Keep Shares Up

Nikola Corp. founder Trevor Milton is in federal custody Thursday, charged with misleading investors about the state of the company, which he left in September. His lawyer didn’t immediately respond to an email seeking comment.

Here are some excerpts from the U.S. Securities and Exchange Commission’s 66-page complaint against him:

Milton was “intensely focused” on the company’s stock price, calling and texting senior executives to “do something” on days when the shares were falling. He also “tracked the daily number of new Robinhood users who held Nikola stock,” according to the complaint.

Milton used his social media presence and appearances in interviews to announce new initiatives and changes, before informing the company.

“On June 25, 2020, Milton sent a series of tweets from his personal account in which he claimed that Nikola would offer a drinking fountain in the Badger. This information came as a complete surprise to Nikola’s designers, engineers, and marketing personnel. When informed of the tweets, one engineer questioned whether ‘this [is] a joke,’ a marketing employee wrote that his ‘head is fuzzy,’ and a designer texted, ‘[u]hhhhh what.’”

Nikola executives repeatedly tried to rein in Milton’s social media. At one point the president asked Milton to let the company’s chief legal officer pre-screen his tweets — an effort akin to what Tesla Corp. did with Elon Musk after the SEC sued him over his tweets.

“Senior Nikola executives attempted other tactics in the spring and summer of 2020 to try to rein in Milton’s social media presence, to no avail.”

They scheduled media training for executives at the company, but Milton did not attend. Instead, Milton’s response was to assert “that these senior executives did not understand current capital market dynamics or what he was trying to accomplish with retail investors, and that he needed to be on social media to put out good news about Nikola to support its stock price.”

A Nikola engineer said in December 2016 that the truck they were working on was “not even remotely ready to operate.” One of the reasons why: “all electrical components were powered through a cord running from an external power source, rather than the truck’s battery.”

“Milton was personally involved in soliciting reservations from several potential customers. He communicated to potential customers that the reservations were cancelable for any reason at any time. For example, on May 9, 2016, as part of his efforts to secure the largest reservation Nikola had received to-date, Milton wrote to a potential customer, ‘[y]ou have full ability to cancel at any time before the options, color and major deposit is made . . . .’ He went on to note to the same reservation holder on three separate occasions that the reservation was cancelable, even going so far to note ‘you can cancel at any time and get [the deposit] back all the way up to the final order . . . .’ Another time, Milton cited the non-binding nature of the reservations in an attempt to convince a potential customer to double the amount of reservations in which the customer was originally interested. Milton wrote to this party, ‘[y]ou had asked for 50 trucks that would have been $500 for each deposit. What I did since it is fully refundable at any time, is put you down for 100 at $250. You can cancel at anytime any of those.’”

When Milton touted the Badger pickup as being “built,” “done,” “real,” and a “fully functioning vehicle inside and outside,” Nikola’s Vice President of Technology referred to the Badger in an internal email as “vapor ware” with “no technical plan.”

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