Comms Lessons From Nikola Founder’s Conviction

Thom Weidlich 10.20.22


Trevor Milton, founder of electric-vehicle company Nikola Corp., was convicted of fraud on Friday. The trial was instructive about the dangers of, yes, breaking the law, but also the way overoptimism can morph into, well, securities fraud. Publicly traded companies need to be vigilant about this sort of thing.

A federal jury in Manhattan found Milton guilty of two counts of wire fraud and one count of securities fraud. Problems at Nikola became news fodder in 2020 when a short-selling outfit called Hindenburg Research issued a report contending the company was a fraud. The report referred to Milton’s alleged “dozens of outright lies.”

A most memorable accusation was that a prototype truck shown in a video moving under its own power was simply rolling down a hill. The trial reportedly provided other examples of such deception. Milton, who resigned as company chairman shortly after the Hindenburg report, was indicted last year. He continues to maintain his innocence and one of his lawyers said he will appeal the Oct. 14 conviction.

Vetting Statements

The case shows that you have to think differently (and harder) about your public statements, including over social media, when running a publicly traded company (think: Elon Musk). There’s a reason that — at companies that have their act together — lawyers, investor-relations experts, and compliance personnel vet such statements.

“Let this case serve as a warning to anyone who plays fast and loose with the truth to get investors to part with their money,” U.S. Attorney Damian Williams tweeted after the jury verdict.

Evidence at the trial included texts from Nikola employees saying that when Milton “has nothing to Tweet, he makes crap up” and that he “doesn’t let facts or details get in the way of a good story,” according to Law360. Nikola CFO Kim Brady testified for the government that Milton resisted efforts to have him tone down his public remarks, according to Carscoops.

Compliance Program

Bracewell LLP attorney Matthew Nielsen told Law360 that companies experiencing growth must “scale up your compliance program and your internal controls because as you grow fast, your risk profile changes rapidly.”


Milton is scheduled to be sentenced Jan. 27. The securities-fraud conviction carries a maximum penalty of 20 years in prison.

Photo Credit: Nikola

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