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Lawyers and Trevor Milton walk to court

With the defense less than a day from resting its case in the federal fraud trial of Nikola founder Trevor Milton, the judge stopped proceedings until Oct. 11 because defense attorney Marc Mukasey tested positive for COVID-19.

After initially banning Mukasey from the federal courthouse in Manhattan, New York, U.S. District Judge Edgardo Ramos said the trial would resume next Tuesday. Another delay is possible if Mukasey does not test negative by next week. Separately, Milton told Ramos he does not plan to testify in his own defense.

Ramos has repeatedly told the jury of nine men and three women to avoid reading about the case. Jurors now also have to avoid the first of what may be several television accounts. An episode of “American Greed” about Milton airs Tuesday evening on business channel CNBC.

Milton faces four charges of wire and securities fraud. He allegedly lied about the electric truck startup’s technology achievements to lure retail traders to invest in the company’s stock.

During three weeks of testimony from prosecution witnesses, Milton was described as a voracious user of social and business media to talk up the company he founded in 2015.

Harvard professor: SEC filings, not podcasts, move stocks

The defense questioned Harvard University law professor Allen Ferrell. He was asked about the correlation between social media and the performance of stock prices.

Ferrell testified that in more than 400 hours of study, he found no relationship between the two. Ferrell said Securities and Exchange Commission filings are far more relevant in tracking stock price movement.

The contention countered the prosecution’s claim that Milton’s interviews and tweets, which Nikola executives were unable to stop despite changing the company’s social media passwords, had artificially inflated Nikola shares in the weeks after it went public in June 2020.

The stock price cratered after a scathing report by short seller Hindenburg Research in September 2020. The claims in the report led Milton to resign as executive chairman and give up his board seat. He was criminally charged in July 2021. He is free on $100 million bond, secured by two ranches he owns in Utah. 

The use of Nikola stock options as partial payment for one of the properties is integral to the fourth count filed in June.

Harvard professor Allen Ferrell
Allen Ferrell, Harvard University law professor, testified as a defense witness Monday in Trevor Milton’s fraud trial. (Photo: Harvard University)

‘General market forces’

Ferrell testified that he has billed nearly $500,000 to the defense at $1,250 an hour for his analysis into what influences stock price movements. 

Among Ferrell’s credentials, he is the Greenfield Professor of Securities Law at Harvard Law School, a faculty associate at the college’s Kennedy School of Government, chairman of the Harvard Advisory Committee on Shareholder Responsibility and a research associate at the European Corporate Governance Institute.

Asked by defense attorney Brad Bondi to explain the difference between a consumer and an investor, Ferrell said they are opposites. He dismissed tweets and podcasts as irrelevant to share prices.

“The movement of the stock is not related to them,” Ferrell said. “It’s simply general market forces.”

Under cross-examination, Ferrell said he was aware that Milton emailed that Nikola’s stock price rose after his media appearances. He did not include that in his models. Ferrell said he did not interview any retail investors in Nikola stock for his work and was unaware that interviews with more than 50 retail traders were turned over to defense counsel as part of discovery.

During redirect questioning by Bondi, Ferrell reiterated that SEC filings are key for investors, not Twitter or podcasts.

Prosecution rests in  Nikola founder Trevor Milton’s fraud trial

Nikola CFO: Milton statements ‘could be inaccurate and exaggerated’

Nikola CEO testifies Trevor Milton went on ‘blitz’ to attract shareholders

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