Nikola, Chairman Milton Face Investor Lawsuit Over Alleged False, Misleading Statements

Nikola Corporation NKLA, its two executives, and chairman, are being sued by an investor for making false and misleading statements about the automaker’s operations, Bloomberg reported Wednesday.

What Happened: The investor, Arab Salem, is suing the company and seeks to represent shareholders that purchased shares in the automaker between June 4 and Sept. 9, according to a complaint filed in a Brooklyn federal court, Bloomberg noted.

Shares of the Trevor Milton-led EV company fell over 25% in this period. On Sept. 10, the company’s shares fell 11% following a report released by short seller Hindenburg Research, which contained allegations that Nikola deceived investors.

Why It Matters: The United States Securities and Exchange Commission is probing allegations made by Hindenburg, according to Bloomberg. The Department of Justice is also reportedly looking into the matter and has held discussions with people on its contents. 

The Hindenburg report came after the EV make forged a $2 billion partnership with General Motors Company GM.

That deal would see the Detroit-based automaker take an 11% stake in Nikola. GM would also help build and engineer the Nikola Badger truck.

GM CEO Mary Barra defended the deal claiming the automaker had a “very capable team that has done the appropriate diligence.”

Price Action: Nikola shares closed nearly 1.4% higher at $33.28 on Wednesday and gained 2.16% in the after-hours session to $34.

Photo courtesy: Nikola Corp.