Following accusations by a short seller against the hydrogen and electric truck startup Nikola was misleading investors and overstating the value of a business deal, the company’s founder Trevor Milton has voluntarily stepped down as the executive chairman of the startup.
Nikola said in a statement on Sunday that Milton has also resigned from the board of the company. Previously, the company had denied all such allegations by the short seller and has even threatened to take legal action against the research company that had made the allegations.
The new chairman of the company with immediate effect will be Stephen Girsky, a former vice chairman of General Motors (GM) and current board member at Nikola.
“The focus should be on the company and its world-changing mission, not me. I intend to defend myself against false accusations leveled against me by outside detractors,” Milton said in a statement posted on Twitter.
A number of misleading information issued to the public and investors by Nikola, which included an allegation that Milton had presented to the public a prototype truck which was touted as being closer to market than it was, were compiled in a report by Hindenburg Research, which makes money by betting against companies, and which was published earlier this month.
Since the report was published by Hindenburg, stock prices of the company tumbled by more than 19 per cent. The share prices dropped by as much as 24 per cent in premarket trade on Monday.
“These allegations by the short seller are false and misleading, and designed to manipulate the market to profit from a manufactured decline in Nikola’s stock price,” Nikola said earlier this month in response to a number of Hindenburg allegations.
In order to lookout for possible legal action against Hindenburg, Nikola has hired a law firm, the company said. It added it had plans to bring the matter before the US Securities and Exchange Commission.
Prior to the publication of the Hindenburg report, a boost from General Motors was obtained by Nikola. GM had said that it would help the upstart develop its new models in exchange for an 11 per cent stake.
Before signing the agreement with Nikola, the company had conducted “appropriate due diligence”, General Motors executives said.
An extensive background on Wall Street will be brought at Nikola by Girsky being chosen for the top job. Girsky had spent a decade as managing director and auto analyst at Morgan Stanley prior to joining GM as a special adviser in 2005.
He also served as an executive at investment firm Centerbridge Partners.
(Adapted from CNN.com)