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Nikola Motors is facing a probe from the US Securities and Exchange Commission over a short-seller’s claims it misled investors about its business prospects, Reuters reported Monday and the company confirmed to Business Insider.
Last week, the short-selling investment firm Hindenburg Research accused the electric truck startup and its CEO, Trevor Milton, of lying for years about Nikola’s products and deals with other companies, calling its business an “intricate fraud.”
“On September 11, Nikola’s legal counsel proactively contacted and briefed the U.S. Securities and Exchange Commission (SEC) regarding Nikola’s concerns pertaining to the Hindenburg report. Nikola welcomes the SEC’s involvement in this matter,” a spokesperson for the company told Business Insider.
The SEC did not immediately respond to a request for comment on this story.
In the lengthy report, Hindenburg said it had “gathered extensive evidence — including recorded phone calls, text messages, private emails and behind-the-scenes photographs — detailing dozens of false statements by $NKLA Founder Trevor Milton,” adding: “we have never seen this level of deception at a public company.”
Hindenburg’s report also claimed that Nikola had staged an “elaborate” deception by rolling one of its prototype Nikola One trucks down a hill for a promotional video, which it said misled investors about the capabilities of the vehicle.
The report, which came days after Nikola announced a $2 billion deal with General Motors that sent its market value soaring more than 40%, caused its stock price to drop as much as 25%.
At the time, a Nikola spokesperson said the report was “filled with misinformation” designed to benefit Hindenburg’s short bet, while Milton called it a “hit job” while promising a more detailed response to the allegations.
On Friday, the company threatened legal action against Hindenburg and said it planned to raise the issue with the SEC.
On Monday morning, Nikola issued the promised response in a detailed rebuttal of Hindenburg’s report, while admitting that it did roll a truck down a hill for the promo video but maintaining it never claimed the vehicle was operating under its own power.Join the conversation about this story » NOW WATCH: How waste is dealt with on the world’s largest cruise ship