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Nikola Corp has agreed to pay $125-million to settle civil charges that it defrauded investors by misleading them about its products, technical advancements and commercial prospects, the U.S. securities regulator said on Tuesday.

The Securities and Exchange Commission (SEC) accused the electric vehicle maker of violating U.S. securities laws with numerous misleading statements made from March to September 2020 about in-house production capabilities, reservation book and financial outlook.

The settlement follows civil and criminal charges filed in July against Nikola founder Trevor Milton for using social media to repeatedly mislead investors about the company’s technology and capabilities, reaping “tens of millions of dollars” as a result of his misconduct. Milton is battling those charges in court after losing a bid to dismiss or move the case.

Milton’s misleading statements aimed at inflating share prices began even before Nikola had produced a “single commercial product or had any revenues from truck or hydrogen fuel sales,” the SEC order said.

Nikola, which did not admit or deny the SEC’s findings, has agreed to co-operate with ongoing litigation and investigation, the SEC said. The company previously disclosed expectations of the hefty penalty in November.

Nikola “is responsible both for Milton’s allegedly misleading statements and for other alleged deceptions, all of which falsely portrayed the true state of the company’s business and technology,” Gurbir Grewal, the SEC’s enforcement director, said in a statement.

Nikola said in a statement that it will continue to execute on its strategy and expand its manufacturing network. The company is seeking reimbursement from Milton for “costs and damages in connection with the government and regulatory investigations,” it said.

Nikola went public via a special purpose acquisition company (SPAC) in June 2020, a process the SEC has criticized for requiring less initial vetting than the traditional initial public offering (IPO) process.

This month, the SEC’s chair said the agency was considering toughening rules around how underwriters, boards of directors and sponsors of SPACs structure fees, issue projections and disclose conflicts.

The plans are part of a broader crackdown on the SPAC sector this year. The SEC has also told top auditors to change their accounting practices, and launched a broad enforcement inquiry of Wall Street banks involved in the deals.

Nikola shares were up 0.74 per cent at $9.32 apiece on the Nasdaq by 10:17 a.m. EST (1517 GMT).

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