The stock market can be a rollercoaster ride, with prices rising and falling based on various factors. But what happens when a company’s stock soars after news of legal proceedings against its founder? That’s exactly what happened with Nikola stock, which saw a 21% increase after prosecutors sought an 11-year sentence for the company’s founder, Trevor Milton.
Nikola Corporation, a manufacturer of electric vehicles, has been in the spotlight for both its promising technology and controversial practices. The company’s stock has experienced significant volatility in recent years, and this latest development has once again put it in the headlines.
The connection between legal proceedings and stock market performance may seem counterintuitive, but in the case of Nikola, it has had a positive impact. Investors are reacting to the news in a way that suggests they see this as a potential turning point for the company. However, it’s important to understand the full context and potential implications of this development before making any investment decisions.
The founder of Nikola Corp., faces up to 11 years in prison after being convicted of fraud for making false statements
Trevor Milton, the founder of Nikola Corp., faces up to 11 years in prison after being convicted of fraud for making false statements about the electric and hydrogen-powered truck maker’s technology. Milton, 42, was found guilty in October 2022 of two counts of wire fraud and one count of securities fraud. Prosecutors said Milton misled investors about Nikola’s technology and its ability to produce and sell electric and hydrogen-powered trucks.
According to the indictment, Milton made false statements about Nikola’s technology, including that the company had developed a proprietary battery technology that was superior to anything else on the market and that the company had built a working prototype of its Nikola One semi-truck. Prosecutors also said Milton misled investors about Nikola’s ability to produce and sell its trucks, including that the company had secured major partnerships with trucking companies and had entered into agreements to build manufacturing facilities.
In a statement after the verdict, U.S. Attorney Damian Williams said, “Milton’s fraud was not a mere exaggeration of optimism or puffery; it was a deliberate and fraudulent scheme to deceive investors into believing that Nikola was on the cusp of revolutionizing the trucking industry. Milton’s lies became the basis for a multi-billion-dollar market capitalization, while Nikola’s shareholders were left with nothing but worthless shares in a company that did not exist as he described it.”
Milton’s lawyers have argued that the government’s case is based on circumstantial evidence and that there is no evidence that Milton intended to defraud investors. They have also argued that Milton’s statements about Nikola’s technology were based on his belief in the company’s potential, not on any intent to deceive.
Milton, 42, was found guilty in October 2022 of two counts of wire fraud and one count of securities fraud. Prosecutors said Milton misled investors about Nikola’s technology and its ability to produce and sell electric and hydrogen-powered trucks.
According to the indictment, Milton made false statements about Nikola’s technology, including that the company had developed a proprietary battery technology that was superior to anything else on the market and that the company had built a working prototype of its Nikola One semi-truck. Prosecutors also said Milton misled investors about Nikola’s ability to produce and sell its trucks, including that the company had secured major partnerships with trucking companies and had entered into agreements to build manufacturing facilities.
In a statement after the verdict, U.S. Attorney Damian Williams said, “Milton’s fraud was not a mere exaggeration of optimism or puffery; it was a deliberate and fraudulent scheme to deceive investors into believing that Nikola was on the cusp of revolutionizing the trucking industry. Milton’s lies became the basis for a multi-billion-dollar market capitalization, while Nikola’s shareholders were left with nothing but worthless shares in a company that did not exist as he described it.”
Milton’s lawyers have argued that the government’s case is based on circumstantial evidence and that there is no evidence that Milton intended to defraud investors. They have also argued that Milton’s statements about Nikola’s technology were based on his belief in the company’s potential, not on any intent to deceive.
U.S. Attorney’s Office has issued a notice to inform investors there is a restitution fund
U.S. Attorney’s Office for the Southern District of New York has issued a notice to individuals and entities that bought or sold stock of Nikola Corporation (ticker NKLA) between March and September 2020. The notice informs investors that they may be eligible to participate in a restitution fund if they were harmed by Nikola’s fraud.
The notice states that the U.S. Attorney’s Office is investigating whether Nikola executives engaged in a scheme to defraud investors by making false statements about the company’s technology and its ability to produce and sell electric and hydrogen-powered trucks. If you purchased or sold NKLA stock during the relevant period, you may be eligible to receive compensation if the government proves that Nikola executives committed fraud.
The notice provides instructions on how to submit a claim for restitution. You will need to provide information about your NKLA stock transactions and the amount of money you lost. The deadline to submit a claim is December 15, 2023.
It is important to note that the U.S. Attorney’s Office has not yet made any findings of wrongdoing. The notice is simply a request for information from potential victims of Nikola’s fraud. If you were harmed by Nikola’s fraud, you should consult with an attorney to discuss your legal options.
Here is a link to the U.S. Attorney’s Office’s notice to investors:
