Nicolas expects to pay $125 million to settle the Saudi Electricity Company – News Couple

Nicolas expects to pay $125 million to settle the Saudi Electricity Company

Electric truck startup Nicola said it will set aside $125 million to settle an investigation by US securities regulators, and will seek compensation from its founder, Trevor Melton, who faces criminal fraud charges.

The settlement is not final. According to a regulatory filing from Nicholas, “The decision is expected to include . . . the results of our violations” of the civil provisions of the US Securities Act prohibiting fraud.

Nicholas declined to comment on the SEC’s findings and potential settlement.

Mark Russell, CEO, told investors Thursday that the company “has been involved in discussions and cooperation with the Securities and Exchange Commission for some time regarding their investigation. We now believe we have a potential settlement with them on the horizon.”

“We look forward to ending this chapter with this potential settlement and focusing with renewed resolve on building our future.”

He added that Nicholas would seek compensation from the Melton founder “for costs and damages arising from actions that are the subject of government investigations.”

The Securities and Exchange Commission (SEC) filed a civil complaint against Melton in July, at the same time the Justice Department filed criminal fraud charges. The Justice Department indictment said Milton misled investors about the viability of Nikola’s products and technology to drive up the company’s share price.

A representative for Melton, who left the company last year, did not immediately respond to a message seeking comment. He has pleaded not guilty to fraud charges.

As the company plans to ask its founder to pay the SEC fine, she and Milton fight over whether Nicola needs to coordinate with his legal defense and help pay for it. Milton’s legal fee bill totaled $12.8 million as of September 30, according to a regulatory filing.

In July, Milton filed a request for private arbitration over the dispute, the suit says, but Nicholas “is skeptical of Milton’s claims and will defend himself in arbitration.”

Nicholas said that if the deal were approved by the Securities and Exchange Commission to end the civil investigation, the $125 million fine would be paid in installments over two years. The company, which spent $9.8 million on regulatory and legal matters in the third quarter, had $587 million in cash and cash equivalents as of September 30.

The company said in a regulatory filing that it had suffered the repercussions of negative publicity about it and Milton, as “customers, potential customers, partners and potential partners failed to give us additional business, canceled or sought to cancel existing contracts, and directed future business to our competitors.”

Nikola’s share price rose more than 12 percent in morning trading in New York.

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