The first shot of the SFC’s spac “strike hard” hit Nikola (nkla. US), a “Tesla in the truck industry”.
On December 21, the CSRC announced that it had reached a settlement with Nikola and ended the investigation of the company. For this purpose, Nikola had to pay a fine of US $125 million (about 796 million yuan). Previously, Nikola was accused by the regulatory authorities of misleading and deceiving investors in terms of products, technological progress and business prospects.
Nikola is also the first closed case in a series of investigations conducted by the securities and Exchange Commission against spac listed companies.
from prototype cars to hydrogen fuel stations are lies
Nikola, which has been bundled with Tesla‘s publicity since its birth, has had unlimited scenery in the capital market. Its investor list includes well-known institutions such as Iveco truck manufacturer CNH industrial NV and Bosch under the rich Agnelli family.
In June 2020, Nikola achieved rapid listing through the SPAC called vectoiq. On the first day of listing, the market value soared to $12 billion, and on the fifth trading day, the market value surpassed that of auto giant Ford.
But at this time, Nikola has not really produced a car. On September 10, 2020, Hindenburg research, a short agency, issued a report, labeling Nikola as a “liar”, claiming that Milton deceived and misled partners, committed fraud when establishing cooperative relations with large automobile manufacturers, and counterfeited in the promotional video of the prototype Nikola one.
Although Nikola argued that the short report was full of misleading information, the short report successfully attracted the attention of the regulatory authorities.
The CSRC said that after investigation, it was found that Nikola misrepresented or omitted important facts in the hydrogenation time of the prototype vehicle, the state of the headquarters hydrogen fuel station, the expected cost of planned hydrogen energy production and power source, which misled investors.
The short report and the investigation of the regulatory authorities led Nikola down the altar, and the share price plummeted. On December 21, the closing price was $9.42, only about 1 / 8 of the high point, and the market value also shrunk to $3.809 billion.
twitter “false advertising”
Trevor Milton, the founder of Nikola, has the label of American favorite grass-roots hero. He grew up on a farm and had two successful entrepreneurial stories before he founded Nikola.
With the successful listing of Nikola, Milton also seems to be attached to musk, frequently interacts with retail investors on twitter, and even frankly allows retail investors to directly pay attention to their accounts and receive Nikola’s updates faster.
With the U.S. Securities and Exchange Commission’s investigation into Nikola, Milton also filed a lawsuit against him in July this year, pointing out that he repeatedly transmitted wrong and misleading information when communicating directly with investors on social media. Last September, Milton himself resigned in the turmoil.
According to the CSRC, Milton, as Nikola’s chief spokesman, frequently appeared in national media during and after the listing through spac. He communicated directly with investors through social media and encouraged investors to pay attention to their social media accounts. Before Nikola really produced any commercial products, Milton began a series of publicity activities to boost the stock price, His remarks on Twitter and media interviews gave investors the impression that Nikola had reached some milestones in products and technology, but in fact misled investors in terms of technology progress, production capacity, financial performance, orders, etc. Milton has personally benefited tens of millions of dollars through these misconduct.
At present, although Nikola has reached a settlement with the securities and Exchange Commission of the United States and ended the investigation against the company, the lawsuit against Milton by the regulatory authorities is still ongoing. The SEC pointed out that Nikola should also be responsible for the misleading remarks of its founder and former CEO Trevor Milton, and Nikola agreed to continue to cooperate with the ongoing litigation and investigation of the sec.
spac era of strict supervision
The punishment against Nikola and the prosecution against Milton are just the tip of the iceberg for the U.S. Securities and Exchange Commission to tighten spac supervision.
Since it does not have its own proprietary business, spac is also known as a bad check company. Its sole purpose is to acquire a private company through additional shares after listing, so as to realize rapid listing. Because it is faster and more convenient than traditional IPO, it has been very hot in the past two years.
According to the data of the US Securities Regulatory Commission, there were 181 spac IPOs in 2021, with a financing scale of US $370 billion, compared with only 26 in 2019. The ultra-high popularity of SPAC has also attracted regulatory attention. Earlier this year, the CSRC has formulated new accounting requirements for spac.
Last week, Gary Gensler, chairman of the US Securities Regulatory Commission, once again expressed his concern about spac. He revealed that the Commission was formulating new requirements for strengthening spac supervision, narrowing the gap between spac IPO and traditional IPO in terms of investor protection, including new regulations to reduce information asymmetry, fraud, conflict of interest and other issues.
While drafting the new regulations, the CSRC continued to “sweep the streets” against spac.
On the same day, lucid motors, a new power of electric vehicles, also received a notice from the CSRC asking for specific information such as forecast data on its recently completed spac listing transaction. The company’s valuation in the SPAC transaction was as high as US $24 billion, which is one of the largest spac mergers and acquisitions so far.
“If Aristotle were here, I think he would warn you that you can’t arbitrage in the system.” Gensler said.
(China Fund News)
