Nikola Founder Trevor Milton Resigns After Short-Seller’s Fraud Accusations

Trevor Milton, the founder of upstart hydrogen truckmaker Nikola Corp., has resigned as its executive chairman and from its board in the wake of allegations by an analyst with a short position in the company’s stock who had accused him of misrepresenting its technology and capabilities prior to going public. Steve Girsky, a board member and former General Motors vice chairman, replaces him as chairman.

“I asked the Board of Directors to let me step aside from my roles as Executive Chairman and a member of the Nikola Board of Directors,” Milton tweeted late Sept. 20. “The focus should be on the Company and its world-changing mission, not me. I intend to defend myself against false allegations leveled against me by outside detractors.”

Nikola “is in amazing hands, and the executive team is well-equipped to lead the Company into the future,” he said. The brash, 38-year-old entrepreneur is Phoenix-based Nikola’s largest shareholder, with a stake of more than 20% that Forbes estimates is worth $3.3 billion as of Sept. 18. Trucking industry news site Freightwaves broke the news of Milton’s departure, citing people close to the matter who weren’t identified.

The news led Nikola shares to plunge nearly 30% at the start of Nasdaq trading.

Nikola was stung by accusations of fraud and misrepresentation in a Sept. 10 report by Hindenburg Research, a financial research firm run by analyst Nate Anderson. Among its allegations, the “breakthrough” battery system Milton said the company was working on last year doesn’t exist and Nikola claimed to have designed technology and vehicle components purchased from other manufactures as its own. “We have never seen this level of deception at a public company, especially of this size,” Anderson said. 

Nikola released a detailed rebuttal refuting some, but not all, of the issues raised in the report which the truckmaker says was timed to benefit the author’s bet the hydrogen truckmaker’s stock would fall. Nikola contacted the Securities and Exchange Commission about the report and both it and the Justice Department are reportedly reviewing the company. Neither agency is commenting.

Nikola says it’s undergone “extensive due diligence processes” by numerous industrial companies it’s partnered with, including Bosch, Hanwha Group, CNH 

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 Industrial and General Motors

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, and financial backers ValueAct Capital and VectolQ Acquisition Corp., the company it merged with to go public in June. It called the report by Hindenburg Research “false and defamatory.”

Girsky, a veteran financial analyst, helped orchestrate Nikola’s public listing through its merger with VectoIQ, his special purpose acquisition company, and introduced Nikola to partner General Motors.

Milton patterned himself to some extent after Tesla’s

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Elon Musk, making brash statements and boasts about Nikola’s hydrogen and battery tech and lashing out at critics on social media. He gave up the CEO role in June when Nikola listed its shares on Nasdaq

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with the more buttoned-down Mark Russell, Milton’s mentor during his time at Worthington Industries, taking the job.

“Our priorities remain unchanged and, in collaboration with our partners, we are laser-focused on executing on our strategic initiatives and laying the groundwork to become a vertically integrated zero-emissions transportation solutions provider,” Russell said in a statement.

The Hindenburg came two days after Nikola shares surged 41% with its announcement of a broad technology and production partnership with General Motors, that gave the largest U.S. auto an 11% stake in the young company.

“When you build a team as a leader, you have to remember that you are the least important person,” Milton said. “You have to hire smarter people than yourself and remember that the Company’s mission is greater than you are.”