Nikola admitted that founder and former chairman Trevor Milton made several “inaccurate” claims about the electric-truck maker’s business before he resigned under pressure last year.
An internal investigation affirmed several findings of the Hindenburg Research report that threw Nikola into chaos last fall after the short-selling firm alleged that the buzzy company had been built on an “ocean of lies.”
Nikola shares dropped more than 9 percent to $17.81 in early trading Friday following the revelation.
The law firm Kirkland & Ellis found that Nikola and Milton made nine statements over a four-year period that “were inaccurate in whole in part, when made,” the Arizona-based startup said Thursday in its annual report.
Some were basic claims about Nikola’s electric trucks, such as Milton’s December 2016 statement that the Nikola One semi was a “fully functioning vehicle,” according to the filing.
Milton made misleading claims as recently as July of last year, when he said that all of Nikola’s major components were “done in house” and that five trucks were “coming off the assembly line” in Germany, the probe found.
But the investigators also determined that some of Hindenburg’s allegations were inaccurate, Nikola said, pointing to findings that the company’s workforce is led by people with deep experience in the industry and that its contributions are consistent with other firms at similar stages.
“These findings are inconsistent with the main conclusion of the Hindenburg article that the company was an ‘intricate’ or ‘massive fraud,’” Nikola said.
Hindenburg’s report nevertheless sparked investigations into Nikola by the Securities and Exchange Commission and the Manhattan US attorney’s office, both of which slapped the company with subpoenas in September.
Milton stepped down as chairman days after those subpoenas arrived. But Nikola said it has nevertheless paid about $8.1 million to cover Milton’s attorneys’ fees under his indemnification agreement with the company.
The week after Milton resigned, two women accused him of sexually assaulting them when they were teenagers. Milton strongly denied the allegations.
A spokesperson for Milton declined to comment Friday.