By Rama Venkat
(Reuters) – Shares of electric-truck maker Nikola Corp tumbled on Monday after founder Trevor Milton stepped down as executive chairman following a public squabble with a short-seller over allegations of nepotism and fraud.
The embattled company named Stephen Girsky, former vice chairman of General Motors Co and a member of Nikola’s board, as chairman, effective immediately.
Short-seller Hindenburg Research said in a scathing report earlier this month that it had gathered enough evidence to show that Nikola and Milton made false claims about the company’s proprietary technology to form partnerships with large automakers.
“The focus should be on the Company and its world-changing mission, not me. So I made the difficult decision to approach the Board and volunteer to step aside as Executive Chairman,” said Milton, who owns about 20% of the company.
“I intend to defend myself against false allegations leveled against me by outside detractors,” he said in a tweet.
Hindenburg also alleged that Milton appointed his brother, Travis, to lead the a unit in the company despite not having any substantial experience related to the sector.
Nikola has rejected all the accusations and threatened to take legal action against Hindenburg. The U.S. Department of Justice and the U.S. Securities and Exchange Commission have been probing the claims made in the report, according to reports last week.
Hindenburg’s report came soon after Nikola sealed a partnership with GM, which took an 11% stake in the company for about $2 billion and agreed to work together to make electric pickup trucks to take on Tesla Inc.
The U.S. Securities and Exchange Commission (SEC) is probing Nikola to assess the merits of short-seller Hindenburg’s allegations, according to a Bloomberg News report last week.
Nikola has said it has briefed the SEC on concerns pertaining to the report.
Shares are down 20% in early morning trading.
Reporting by Rama Venkat and Ayanti Bera in Bengaluru; Editing by Shounak Dasgupta.