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Criminal accusations of Nikola’s founder notify other SPACs

Nikola Corp. Founder and former CEO Trevor Milton left Manhattan Federal Court on July 29, 2021 after appearing in New York City, USA.

Eduardo Munos | Reuters

Federal authorities Nicola Founder Trevor Milton warns about two of Wall Street’s hottest growth areas: structured companies and retail investors.

In issuing the indictment, authorities warned individual investors not to be persuaded by “friends or talkative salesmen” about investing in businesses. They also revealed that the SPAC is at their crosshairs. Milton became a millionaire overnight when he opened the company through a SPAC contract in June 2020.He Acquitted On Thursday, in a Manhattan court, he accused him of deceiving investors by lying about “almost aspects of the business.”

Gurbir Grewal, executive director of the Securities and Exchange Commission, told reporters, “The proceedings always provide complete, truthful and accurate information when executive officers like Milton discuss the company’s operations. I have a duty. ” “There are no end or exception to this obligation. This applies to all public companies, including SPAC transactions, including public companies that have recently entered the public market.”

Nicola is one of at least three electric vehicle start-ups under investigation by federal prosecutors for potentially misleading investors.Others Lordstown Motors When Canoeing..

Officials involved in the investigation allege that Milton abused the SPAC process by using social media and other media to directly spit out false and misleading information about the company to individual investors.

They said Milton was obsessed with retail investors and their role in maintaining Nikola’s share price.This includes tracking the number of users Robin hood, A popular social stock app that owns Nikola shares.

“In carrying out his fraudulent plans, Milton took advantage of features of the SPAC structure that differed from traditional initial public offerings or IPOs,” said Audrey Strauss, a lawyer in the United States.

Attorney Brad Bondi said in an email Thursday that Milton was “unjustly accused of an incomplete and incompetent investigation” and that justice would not be provided until he was exonerated. ..

SEC and SPAC

Warnings to SPACs have emerged last year as an increasingly popular way for businesses to publish, following increased SEC oversight of such businesses.

Strauss said SPAC differs from traditional IPOs in that it is not subject to a quiet period before the public trade begins. She said Milton was free to talk about the company on social media throughout the process of listing through a reverse merger with VectoIQ in June 2020.

“During that period, Milton bravely and repeatedly made false and misleading claims about the state of Nicola’s technology,” Strauss said. “Milton lied to create a popular demand for Nicola’s stock.”

Warning to individual investors

Federal officials have warned investors about the hype stocks.

“Trust your gut and check the details before engaging in any kind of investment,” said Philip Bartlett, an inspector in the New York division of the US Post Office. “If you feel it’s not right, it’s probably a scam.”

Comments from the agency in May Was spending important resources To address new SPAC issues, new ideas and recommendations for SPACs, and how to properly protect individual investors.

Last year’s explosive popularity of SPACs also attracted many new celebrities to Wall Street to keep up with the times. SEC previously warned He opposed these public figure-backed deals and urged investors to rethink before jumping in.

— CNBC Yun Lee Contributed to this story.

Criminal accusations of Nikola’s founder notify other SPACs

Source link Criminal accusations of Nikola’s founder notify other SPACs

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