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On December 21, 2021 the U.S. Securities and Exchange Commission (SEC) announced that the Nikola Corporation, a publicly traded company created through a special purpose acquisition company (SPAC) transaction, agreed to pay $125 million to settle charges that it defrauded investors by misleading them about its products, technical advancements, and commercial prospects.
The SEC order1 stated that “from at least March 2020 through September 2020, Milton’s [former CEO of Nikola] statements in tweets and media appearances, individually and taken together, painted a picture of Nikola that diverged widely from its then-current reality.” The order also finds that Nikola further misled investors by misrepresenting or omitting material facts about its business prospects.
Notably, the order also recites that, “in order to preserve the deterrent effect of the civil penalty,” Nikola agrees that, in connection with any Related Investor Action, it “shall not argue that [Nikola] is entitled to, nor shall [Nikola] benefit by, offset or reduction of any award of compensatory damages by the amount of any part of [Nikola’s] payments of a civil penalty in this action.”
This settlement, which reflects the SEC’s heightened scrutiny of SPACs, suggests additional SPAC enforcement actions may occur in 2022.
1 (SEC File No. 3-20687) (December 21, 2021)
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