August 22, 2025
A multi-court string of settlements has produced a $33.75 million proposed payout for stockholders who alleged in direct and derivative state and federal actions that they were misled in deals that took electric vehicle maker Nikola Corp. public.
The latest version reflects a $5.45 million addition to a $22 million contribution that had already emerged from derivative damage settlements recently approved in the U.S. Bankruptcy Court for the District of Delaware.
Also up for approval is an earlier $6.3 million deal to end Delaware Court of Chancery direct claims that accused the special purpose acquisition company that took Nikola public of misleading investors about Nikola’s prospects.
The pacts emerged from a lengthy, multi-state, multi-court process and multiple mediation sessions in New York City and elsewhere. Up for approval are deals that cover in part a suit filed in 2022 accusing directors of Nikola and the blank check company that took it public — VectolQ — of insider trading, securities fraud and merger related breaches.
Settlement payouts include $27.45 million in cash, secured through Nikola’s Chapter 11 proceeding, with the deal financed in part by $17.5 million from Nikola’s director and officer insurers and $2.5 million to be paid by Trevor Milton, the Nikola founder who was sentenced to four years in prison in 2024 and pardoned by President Donald Trump in March.
Insiders of the Phoenix-based company allegedly allowed Milton to intentionally mislead investors about the company’s prospects and ability to build zero-emission trucks, artificially inflating the company’s valuation to as high as $28.77 billion in an “old-fashioned ‘pump and dump’ scheme,” according to one version of the Chancery Court derivative suit, filed in 2022.
“Plaintiffs allege that certain of the individual defendants breached their fiduciary duties, including disclosure violations” and “oversight failures,” and participated in insider trading through misappropriation or aiding and abetting misappropriation of non-public information, a notice of the settlement docketed with the court on Thursday said.
The remaining derivative settlement amount includes $6.95 million to be paid in part on behalf of parties associated with Jeffrey W. Ubben, Nikola board member and founder of the investment company ValuAct.
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The plaintiffs are represented by Peter B. Andrews, Craig J. Springer and David M. Sborz of Andrews & Springer LLC, Blake A. Bennett of Cooch & Taylor PA, Julie Goldsmith Reiser, Richard A. Speirs and Benjamin F. Jackson of Cohen Milstein Sellers & Toll PLLC, Frank J. Johnson, Brett M. Middleton and Jonathan M. Scott of Johnson Fistel LLP and Gregory E. Del Gaizo of Robbins LLP.
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