With this Complaint, Plaintiff seeks to enforce her right as a shareholder of Nikola to inspect Nikola’s books and records pursuant to 8 Del. C. § 220 (“Section 220”) so that she may investigate potential breaches of fiduciary duty by the Company’s directors and officers in connection with (i) fraudulent and false statements made by the Company and its founder and Executive Chairman, Trevor Milton (“Milton”), concerning the Company’s technology, products, plans, and production capability; (ii) United States Department of Justice and Securities and Exchange Commission investigations of allegations of false statements by Nikola and Milton; and (iii) allegations of sexual assault made against Milton.

Specifically, on September 10, 2020, Hindenburg Research published a report (the “Hindenburg Report”) concluding that “Nikola is an intricate fraud built on dozens of lies over the course of its Founder and Executive Chairman Trevor Milton’s career.” The Report stated that the Company, and particularly Milton, made dozens of false statements regarding, among other things, Nikola’s technology, products, plans, and production capability. For example, the Report found:

• The “zero emissions” Nikola One truck the Company promised and previewed in 2016 as a hydrogen powered vehicle was designed to be powered by compressed natural gas and did not run on its own;

• The “Nikola One in Motion” video was staged, as the vehicle in the video was filmed rolling downhill rather than on its own power;

• The “closed cabin” luxury NZT vehicle touted in 2019 did not exist and was outsourced to a third party;

• The “Game-Changing” new cell technology battery the Company announced in November 2019 did not exist;

• Nikola’s claims to have lowered the cost of hydrogen were false;

• Nikola had not completed a facility to produce hydrogen, and was not producing hydrogen, as it claimed;

• Nikola exaggerated its capability to design and build batteries, inverters, and other components “in-house”;

• The Company falsely represented in July 2020 that five electric Tre vehicles had been built in Europe; and

• The Company inflated and misstated the number of reservations for its vehicles.

According to the Wall Street Journal, talks with BP to build hydrogen- refueling stations have stalled since the Hindenburg Report was published.

In addition, Nikola does not have a station network or a natural gas supplier, making the above-referenced prospectus statement false.

Nikola common shares closed at $42.37 per share on the NASDAQ on September 9, 2020. Following the release of the Hindenburg Report, the price of Nikola shares declined precipitously, closing at $32.13 per share on September 11, 2020, a decline of $10.24 per share, or 24%.

As of January 10, 2022, shares of Nikola stock were trading at $9.93, $20.47 below its 52-week high ($30.40), which the company achieved on January 27, 2021.

In September 2020, Bloomberg and the Wall Street Journal reported that both the SEC and DOJ were investigating allegations of false statements by Nikola and Milton.

Then, on September 28, 2020, CNBC reported “[t]wo women have come forward with formal sexual assault allegations against Nikola founder Trevor Milton.”

Aside from the instant action and the other books and records demands and complaints filed by other Nikola shareholders, the Company has been embroiled in litigation as a result of the false and misleading statements alleged above. Nikola, for example recently reached a $125 million settlement with the SEC. In addition, Nikola founder and former Executive Chairman Milton was named in a federal indictment handed down by a grand jury in the Southern District of New York.

A copy of the complaint can be viewed here: 

To learn more about this action, contact us today!

Posted in

Grabar Law