Securities Regulation Daily Wrap Up, FRAUD AND MANIPULATION—D. Ariz.: Nikola execs knew facts were misstated, (Sep 10, 2026)

By R. Jason Howard, J.D.

When the misrepresentations came to light, Nikola’s stock value dropped and caused significant losses and damages to the class members.

The District Court of Arizona has ruled on numerous motions before it in a class action brought against Nikola Corporation and several of its officers and directors for alleged violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by misrepresenting numerous aspects of Nikola’s business and operations (Borteanu v. Nikola Corp., No. 2:20-cv-01797-SPL (D. Ariz. Sept. 9, 2026)).

Nikola. Nikola is a publicly traded Delaware corporation with its headquarters in Arizona that designs and manufactures electric vehicles and their components. The plaintiffs alleged that during the class period, June 4, 2020, through February 25, 2021, Nikola, through its CEO, CFO, Board members, and its founder and former Executive Chairman, misrepresented numerous aspects of Nikola’s business and operations which led to significant losses and damages to the class members.

Motions. In its order, the court stated that all the motions were fully briefed and ripe for review. Following extensive analysis of each and, after having considered all the parties’ arguments, the court granted lead plaintiffs’ motion for partial summary judgment after finding that Nikola’s founder and former Executive Chairman’s criminal conviction for securities fraud precluded him from challenging his liability for securities fraud in the instant matter. Having found that collateral estoppel applies, the court denied the founder and former Executive Chairman’s motion for summary judgment. Despite receiving a pardon for his crimes and avoiding punishment, the court noted that “pardons do not erase a judgment of conviction, or its underlying legal and factual findings.”

The court then addressed the motion for summary judgment brought by one of Nikola’s Board members who argued that the claims against him were time-barred because the plaintiffs filed their Second Consolidated Amended Class Action Complaint on April 3, 2023, which made April 3, 2021, the outer limit of the statute of limitations. The defendant argued that he was entitled to summary judgment because the plaintiffs had the information necessary to plead their claims more than two years before the Second Amended Complaint was filed. The court agreed and granted the motion for summary judgment.

Next the court addressed the motion for summary judgment brought by Nikola’s CEO and CFO who asserted that the Section 10(b) claims against them failed based on a maker liability theory because plaintiffs could not show falsity, scienter, or loss causation. They also argued that plaintiffs could not prevail on a scheme liability theory as to them and, finally, they argued that plaintiffs could not establish control person liability against them. The court denied the motion after determining that it could not determine as a matter of law that the defendants were not liable under maker liability, scheme liability, or control person liability.

The court concluded that the evidence submitted, including the exchange of encouraging messages the CEO sent to the founder and former Executive Chairman after he made misrepresentations in interviews, and an internal email between the CFO and CEO decrying the fact that investor was discovering inconsistencies in the founder and former Executive Chairman’s statements, must be weighed by a jury.

Lastly, the court addressed the CEO and CFO’s motion to exclude the plaintiffs’ expert witness and the Board members Joinder in the motion and found that the plaintiffs demonstrated that the expert’s report “more likely than not, is helpful, based on sufficient facts and date, and the product of sound and reliable methods,” and the defendants had not shown otherwise. Instead, the court stated, the results reached by the expert “as well as the persuasiveness of his conclusions, will be litigated at trial.”

Conclusion. The lead plaintiffs’ motion for partial summary judgment was granted; the founder and former Executive Chairman’s motion for summary judgment was denied; the Board member’s motion for summary judgment was granted; the CEO and CFO’s motion for summary judgment was denied; the CEO and CFO’s motion to exclude the expert witness and the Board member’s Joinder in that motion were denied; and the lead plaintiffs’ motion to strike the Board member’s Joinder in the motion to exclude the expert witness was denied as well.

The case is No. 2:20-cv-01797-SPL.

Judge: Logan, S.

Attorneys: Brian Schall (Schall Brown & Schwartz LLP) for Daniel Borteanu. Alison R. Benedon (Paul, Weiss, Rifkind, Wharton & Garrison LLP) for Nikola Corporation.

Companies: Nikola Corporation

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