Sept 15 2020- US justice department inquires into Nikola fraud claims

 

The US Department of Justice has been making inquiries into claims levelled against truckmaker start-up Nikola in a short seller’s report, said people familiar with the conversations. The US Attorney’s Office for the Southern District of New York is interested in the report by Hindenburg Research, which said the electric vehicle maker misrepresented its proprietary technology and called the business an “intricate fraud”. The report raised questions over Nikola’s own technology, but also focused heavily on founder Trevor Milton and detailed business dealings that ended in litigation at one of his earlier ventures. Nikola called the report “false and misleading” and issued a detailed rebuttal of the allegations on Monday, although it conceded several of the claims made in the Hindenburg report. It relied on supplier technology in early models and used a vehicle rolling downhill in a marketing video, Nikola said. It defended Mr Milton against the personal accusations against him. Mr Milton previously ran a group specialising in clean gas trucks called dHybrid, which Hindenburg alleged lied to partners about its technology and the size of its order book. The DoJ has called people to discuss the company and the report’s allegations in recent days, said people familiar with the conversations. Both the US attorney’s office in Manhattan and Nikola declined to comment. The involvement of DoJ investigators is the latest twist in a saga that has sent Nikola’s shares down 40 per cent since last Thursday, only two days after the company signed a bn deal with General Motors that had sent them to a record high. The truckmaker’s shares rose steadily since listing in the summer through a combination with a special purpose acquisition company, a move that allowed it to sidestep a traditional initial public offering. The Securities and Exchange Commission is also in the early stages of investigating both the allegations raised about Nikola in the report, and the truckmaker’s claims of market manipulation against the short seller, said two separate people. Nikola has said it proactively contacted the SEC to report “concerns” about the short seller’s report, and it “intends to fully co-operate with the SEC regarding its inquiry into these matters”. The SEC declined to comment. Jacob Kahn, a partner at Riley Safer Holmes & Cancila who represents companies in securities cases, said that just because prosecutors or civil regulators are making inquiries “doesn’t mean it’s serious. It means there’s smoke. There may or may not be fire, but there’s enough to warrant committing resources to it.”

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