Courtroom drama continues as Nikola Corp (Nasdaq: NKLA) CEO Mark Russell takes the stand on founder Trevor Milton’s trial for allegedly misleading investors on the company’s progress.
The chief executive laid out his concerns on Milton’s public behavior and statements, saying he agreed to assume company presidency as long as he would take the CEO position when Nikola goes public.
Russell joined the company in 2019 and was promoted to CEO shortly before Nikola’s Nasdaq listing in 2020. But, in what he calls a breach of his understanding, Milton became chairman of the company, having final say on critical decisions.
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After the listing, Russell would often remind Milton that “his public statements would equate to a press release or securities filing.”
“He was very focused on the stock price day to day and was excited when it went up, and that concerned me,” Russell said. “I felt the most important thing we could do is build value for the long term.”
In one instance to illustrate Milton’s tendency to exaggerate, Russell relayed to the court that he learned only after joining the company that Nikola’s debut electric truck had neither a gas-powered turbine nor a fuel cell when the founder unveiled it to the public in 2016.
Russell, due to retire by January 1, also read excerpts from a 2020 email thread among Milton, then-director Jeff Ubben, and current chairman Steve Girsky. In it, the parties called out the fact that Milton’s father was a sitting director at the time Nikola was about to go public.
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However, Milton pushed back, apparently stating in the email that the most important thing is that he “fully [controls] the board at all times and have people that work well with [his] personality.”
The trial on securities and wire fraud charges against Milton is currently on its second week. He is being accused of misleading investors by misrepresenting inoperable products as fully functional and lying about the company’s technology and partnerships.
The company settled the SEC investigation into the company for alleged misrepresentation to clients for US$125 million. However, law enforcement still went into penalizing Milton himself.
He faces a maximum prison term of 25 years if convicted of the most serious charge.
Nikola Corp last traded at US$4.52 on the Nasdaq.
Information for this briefing was found via Bloomberg and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
