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Nikola slides another 7% after Justice Department joins SEC in fraud probe

Trevor Milton
Nikola founder and executive chairman Trevor Milton.
  • Nikola's stock price tanked up to 8% in pre-market trade on Wednesday after the US Justice Department joined the SEC in probing fraud claims against the company. 
  • The SEC announced this week it will investigate the electric truck-maker for "intricate fraud".
  • The company's stock has had a volatile week, including jumping on news of a $2 billion deal with General Motors and tanking on a scathing short-seller report by Hindenburg research last week. 
  • Visit Business Insider's homepage for more stories.

Nikola shares fell as much as 8% in pre-market trade on Wednesday, after the Justice Department joined forces with the SEC in examining claims the electric-vehicle start-up is a fraud.

The Wall Street Journal reported Wednesday, citing confidential sources, the Justice Department's inquiry is being handled by the Manhattan U.S attorney's office, working in tandem with the Securities and Exchange Commission. 

As of 08:14 am. ET, pre-market indications were pointing to a 7% drop for the company's stock price, bringing losses since last Tuesday to nearly 45%. 

Bloomberg reported earlier this week the electric truck maker is facing an SEC probe over several claims the company is a fraud. 

Nikola said in a statement on Monday: "Nikola has contacted and briefed the U.S. Securities and Exchange Commission regarding Nikola's concerns pertaining to the Hindenburg report. Nikola intends to fully cooperate with the SEC regarding its inquiry into these matters."

Nikola, which has risen more than 220% in the last 12 months, struck a $2 billion deal with General Motors last week, triggering a 40%-rise in the share price in a single day.

Screenshot 2020 09 16 at 13.19.51

Read moreMORGAN STANLEY: Buy these 6 stocks poised for gains as the economic recovery continues and Congress mulls more coronavirus stimulus

The rally was short-lived as a report by short-seller Hindenburg Research claiming the company is a fraud caused the stock to slide.

Read moreMorgan Stanley pinpoints the most attractive opportunity it sees for investors as a new bull run takes shape — and shares 3 strategies for generating market-beating returns 

The SEC will now examine possible violations of securities laws, but the investigation is said to be preliminary and may not lead to any findings of wrongdoing, according to Bloomberg.

The Wall Street Journal said both federal inquiries may result in no formal accusations of wrongdoing.

Read the original article on Business Insider

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