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Nikola founder Trevor Milton to step down as executive chairman amid fraud accusations

Nikola founder Trevor Milton has announced he will step down as executive chairman amid fraud accusations. Yahoo Finance's Julia La Roche shares the details.

Video Transcript

ADAM SHAPIRO: Julia La Roche, you're keeping an eye on Nikola. Shares in the pre-market were off 30% on news that Trevor Milton was stepping down. Not good after we started trading. What is going on?

JULIA LA ROCHE: Yeah, well, the latest, Adam, is that this stock is down about 22%. And what is going on, overnight you had the founder and executive chairman Trevor Milton step down. And this comes following those allegations from a short seller, Hindenburg Research, which released a scathing and very long and detailed report basically saying that this is a company that's built on fraud and dozens of lies over the course of Milton's career.

He posted-- Milton posted on Twitter at 2:11 AM Eastern time. He posted the following. "I will be cheering from the sidelines with you, your greatest fan." And he said, quote, "I asked the Board of Directors to let me step aside from my roles as executive chairman and member of Nikola's Board of Directors. 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."

Of course, he issued much longer statement. And keep in mind, Nikola has come out and said that they think these allegations are false and defamatory, and they said this is a financially motivated short seller to manipulate the market and profit from the decline. Now, I'll also point out we have reports that the SEC and the Justice Department have looked-- are looking into the company of inquiries that are going.

Nikola did say that they are cooperating with the SEC. They said that in their statement. But Hindenburg Research also tweeted in response to Milton's resignation here saying that this is, quote, "just the beginning." He also earlier, after, I guess, they issued their rebuttals, pointed out they only answered 10 of his 53 questions he had and that it was basically a tacit admission of securities fraud.

I did look into the 8K filing that the company put out about Milton and some of his, I guess, what they agreed to here, that he agreed to stay on as a, quote, "unpaid consultant," that he'll make himself reasonably available to the company. They also noted that he agreed to relinquish 100% of 4.8 million performance-based stock units that were granted on August 21 and that he agreed to, I guess, relinquish the right to enter into a consulting agreement that would have paid him an annual fee of $10 million. So here, he's remaining unpaid.

The-- the company also said they would reimburse him for some security detail, some inspection to his house, those sorts of things. Keep in mind, he has 91.64 million shares in this company. And he also agreed that he would revise his social media, take down that he's affiliated with the company, and that he would talk to the chief legal officer if he was to post anything about the company. So this is, I think, a story that's going to continue. A lot of interest here how this ultimately plays out.