Nikola’s disgraced founder Trevor Milton is being forced to pay $165 million and interest back to the hydrogen and electric semi-truck maker after he made fraudulent claims that triggered a costly investigation and fine by the Securities and Exchange Commission.
The determination was made by an arbitration panel in New York on Oct. 20, Phoenix-based Nikola said in a filing on Tuesday.
“The company had sought reimbursement from its founder and former executive chairman for costs and damages arising from actions that were the subject of government and regulatory investigations, including the December 2021 Securities and Exchange Commission settlement and associated civil penalty,” Nikola said in the filing. “The company intends to file with the arbitration panel an application to recover attorneys’ fees related to the matter.”
Nikola spokesman Dan Passe provided no additional comment. Nikola shares rose 9% to $1.04 in mid-day Nasdaq trading after the news broke.
The move comes as Milton, who left Nikola in 2020, awaits sentencing on his conviction for securities and wire fraud in a federal court in Manhattan in October 2022. The entrepreneur was accused of making exaggerated and fraudulent claims about the company’s technology prior to and after Nikola’s public listing, highlighted in a scathing report by short-seller Hindenberg Research in September 2020.
In addition to Milton’s conviction, the SEC’s investigation also led to a $125 million fine Nikola agreed to pay in late 2021. It has been seeking to recoup money and stock from Milton, previously its largest shareholder, for the past two years.
Though the company’s market cap was decimated due to the Milton-related scandal, it managed to begin building and selling battery-powered semis last year and started shipping hydrogen fuel cell-powered Tre trucks last month.