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Founder Nicola Trevor Melton guilty of defrauding investors

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(Bloomberg) — Founder Nicola Trevor Melton was convicted of fraud for misleading investors in the electric truck company, the stunning collapse of a door-to-door salesman-turned-billionaire who promised to revolutionize the auto industry.

Milton, 40, was indicted Friday on two counts of securities fraud and two counts of electronic fraud by a federal jury in Manhattan, boosting the US Department of Justice’s efforts to crack down on corporate crime. He faces the prospect of years in prison.

Read more: Melton described as a serial liar, and the victim of a distorted case, in shutdown

It was a road trip for the charismatic entrepreneur, whose fortune has tumbled into the hundreds of millions since Nikola’s stock increase when the company listed its shares in June 2020. Milton, who remains the company’s largest single shareholder, founded Nikola in 2014 and built it into a company worth 34 $1 billion when it went public, more than Ford Motor Company at some point.

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The rapid rise of the startup, which had no revenue at the time, came amid a wave of electric car companies going public through special purpose acquisition companies, or SPACs, that began two years ago as investors scoured the scene for Tesla’s next car. Going the SPAC route allowed them to market their companies based on future performance expectations rather than actual financial results. Some of the biggest names on Wall Street have poured money into the sector.

Celebrity endorsements

After Nikola’s inclusion, mainstream investors started noticing Milton’s vision as well, with the company being discussed as often online as was the case with Elon Musk. While Nikola’s initial focus was on heavy commercial trucks, she branched out to run sports and consumer electric vehicles. It was all bolstered by celebrity endorsements like the Diesel Brothers’ Heavy D, who promoted the Badger Pickup, a product that never made it past the rendering stage.

Prosecutors argued that Milton lured retail investors to buy Nikola’s stock by making false statements about the company’s products and capabilities in numerous interviews on podcasts and television, exaggerating Nikola’s ability to manufacture hydrogen fuel cell trucks as well as its ability to produce fuel. Itself.

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Assistant US Attorney Jordan Estes told the jury in her closing arguments Thursday that it was “a lie after a lie.” “Maybe it was his lies on social media, but make no mistake: This was an old scam.”

Read more: Nicola’s CEO says he learned the truck didn’t have power until after he was hired

Milton’s lawyers described the case as a “litigation by distortion,” claiming that their client never intended to deceive potential investors and that, in any event, his statements were not material or significant enough to influence those investors’ decisions.

Milton was generally upbeat when he arrived at court in a suit and tie to sit down with his attorney. Sometimes there were dozens of people in the courtroom, as his family and friends crowded the first two rows behind the defense table.

Concluding his speech, which made Milton’s wife weep, defense attorney Mark Mukasey asked the jury to “imagine the nightmare that Trevor, 40, is going through, with his life on the line” due to an over-zealous prosecution.

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There were lighter moments, too. In a tense vigil during Friday’s jury deliberations, Mukasey did some practice on a golf swing with a mock club.

During the trial, which began with opening statements on September 13, the government called dozens of witnesses. It all started with Paul Lackey, a former contractor with Nicholas Inc. The fraud allegations helped spur a criminal investigation.

Lucky, an engineer with electric propulsion systems company EVDrive, said he gave Nate Anderson’s Hindenburg Research information in exchange for a share of its profits from the company’s short sale. The seller’s September 2020 short report described Nikola as a “complex fraud” who, among other allegations, exaggerated the capabilities of his first test trucks. Nikola shares plummeted.

The government summoned the other insiders of Nikola to the witness stand. between them:

  • Brendan Papiers, former designer of Nicholas who said a prototype of the Badger pickup truck planned to start the electric vehicle was made in part from components from the Ford F-150 Raptor

  • CEO Mark Russell, who said he only learned after joining the company that his first electric truck had neither a natural gas turbine nor a fuel cell when Milton revealed it

  • Chief Financial Officer Kim Brady, who said Milton was so focused on the company’s stock price that when shares fell $5 on the first day of trading, he thought something was wrong with the Nasdaq

The defense contacted Harvard Law School professor Allen Ferrell, an expert on economics and the stock market, who told the jury that traders mostly ignored Milton’s remarks between the time his company was announced and the time he resigned.

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Read more: Nicola Trevor Melton founder will not testify in fraud trial

The case is United States v. Melton, 21-cr-478, US District Court, Southern District of New York (Manhattan).

Read more

  • Nicholas tells whistleblowers their side about Trevor Milton Saga

  • Nicola Investor Lost $160,000 In Milton Hype, Tells Jury

  • Nicholas saw Badger’s losses as “enormous” but supported Milton anyway

  • Trevor Melton faces the jury on his toughest sales job yet

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US Banks Warn of Recession as Inflation Hurts Consumers Stocks Fall By Reuters

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© Reuters. FILE PHOTO: Workers are seen in the windows of the JP Morgan offices in Canary Wharf, London on September 19, 2013. REUTERS/Neil Hall/File Photo

By Saeed Azhar and Noor Zainab Hussain

NEW YORK (Reuters) – The largest U.S. banks are bracing for a downturn in the economy next year as inflation threatens consumer demand, executives said on Tuesday.

Consumers and businesses are doing well, Jamie Dimon, CEO of JPMorgan Chase & Co (NYSE: NYSE), told CNBC, but noted that may not last for much longer as the economy slows and inflation erodes consumer spending power.

“Those things could derail the economy and cause this moderate to severe recession that people are concerned about,” he said.

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He told CNBC that consumers have $1.5 trillion in excess savings from pandemic stimulus programs, but they could run out some time in the middle of 2023. Dimon also said the Fed could pause for three to six months after raising benchmark interest rates to 5%, But this may “not be enough” to rein in high inflation.

The US central bank last month raised interest rates by 75 basis points during its fourth consecutive meeting to 3.75%-4%, but also signaled hopes of switching to smaller increases as soon as at its next meeting.

Major bank stocks fell sharply the next day after a group of senior bankers outlined risks to the economy. Bank of America (NYSE:) stock fell more than 4%. Goldman Sachs Group Inc (NYSE:) and Morgan Stanley (NYSE::) both fell by more than 2% and Citigroup Inc (NYSE:) fell more than 1%.

Bank of America CEO Brian Moynihan told investors at a Goldman Sachs financial conference that the bank’s research shows “negative growth” in the first part of 2023, but that the contraction will be “moderate.”

Moynihan said the lender’s investment banking fees will likely fall 55% to 60% in the fourth quarter from a year earlier, while trading revenue will likely rise 10% to 15%.

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“Economic growth is slowing,” Goldman Sachs CEO David Solomon said at the same conference. “When I talk to our customers, they sound very careful.”

He said the job market in the banking sector remains “surprisingly tight” and competition for talent “as tough as ever”.

However, some banks are cutting staff. A source familiar with the company’s plans said Tuesday that Morgan Stanley has cut about 2% of its workforce. The job cuts, first reported by CNBC, affected about 1,600 jobs and track workforce cuts at Goldman and Citigroup.

Elsewhere on Wall Street, BlackRock Inc., the world’s largest asset manager (NYSE:) froze hiring except for critical roles, CFO Gary Shedlin said.

“We’re trying to be more prudent,” he said.

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Stocks fluctuate as investors ponder the course of prices

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Next week’s Federal Reserve decision and inflation figures may provide more clarity on interest rates

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Oil prices are falling as US oil supplies fell for the fourth straight week, but product inventories rose sharply

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Oil prices fell on Wednesday, giving up modest early gains, despite US government data showing domestic supplies of crude oil fell by more than 5 million barrels last week, declining for the fourth consecutive week, although gasoline and distillate inventories rose. sharp. .

Fears that more rate hikes by the Federal Reserve could cause markets to stagnate in recent days have sent oil prices down for three consecutive sessions, despite concerns about the impact of a G7 price cap on Russian oil that was imposed. Monday. .

price action
  • WTI January delivery
    CL00,
    -1.89%

    cl.1,
    -1.89%

    CLF23,
    -1.89%

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    It fell 25 cents, or 0.3%, to trade at $74 a barrel on the New York Mercantile Exchange. On Tuesday, it was the final low for the next month’s contract since Dec. 23, 2021, according to market data from Dow Jones.

  • Brent February
    BRN00,
    -1.55%

    BRNG23,
    -1.55%
    And the
    The global index lost 15 cents, or 0.2%, to $79.20 a barrel on the ICE Futures Europe platform. Tuesday closed at its lowest level since January 3.

  • Back to Nymex, January gasoline
    RBF23,
    -2.30%

    And it fell 0.8 percent to $ 2.1329 a gallon, while heating oil for the month of January
    HOF23,
    -3.74%

    It traded at $2.8732 a gallon, down 1.5%.

  • Natural gas for the month of January was trading at $5,522 per million British thermal units, up 1%.

display data

On Wednesday, the Energy Information Administration reported a fourth consecutive weekly decline in US crude inventories, but both gasoline and distillate inventories rose.

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“If crude stocks continue to decline, they are likely to challenge the general downtrend that has been identified [oil] “Last month’s prices,” said Robbie Fraser, director of global research and analytics at Schneider Electric.

Domestic commercial crude stocks The Energy Information Administration said that a decline of 5.2 million barrels in the week ending in the second of December.

On average, analysts had expected a drop of 2.6 million barrels, according to a survey by S&P Global Commodity Insights. The American Petroleum Institute, a trade group, reported late Tuesday that crude supplies fell by 6.4 million barrels last week, Dow Jones reported, citing a source.

“Continued strength in refining activity and exports has encouraged another pull” for crude supplies, said Matt Smith, principal oil analyst for the Americas at Kpler, in response to the supply data.

With US Strategic Petroleum Reserve transfers slowing, US commercial inventories have declined year-to-date and are “set to decline further in the coming weeks,” he said.

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Still, the EIA showed weekly inventory gains of 5.3 million barrels of gasoline and 6.2 million barrels of distillate. The S&P Global Commodity Insights survey called for an increase of 2.9 million barrels for gasoline and 1.9 million barrels for distillates.

The Energy Information Administration said crude inventories at Cushing, Oklahoma, the delivery hub for Nymex, fell by 400,000 barrels over the course of the week, while inventories in the Strategic Petroleum Reserve fell by 2.1 million barrels.

other market drivers

China has announced measures to roll back some coronavirus restrictions. Among them is reducing harsh lockdowns and ordering schools with no known infections to resume normal classes, the Associated Press reported Wednesday.

“Traders have been looking for more positive news when it comes to China’s zero-tolerance COVID policies,” Naeem Aslam, senior market analyst at AvaTrade, said in a market update.

And now “we’ve heard from those responsible for further easing of these measures,” providing a boost to investor sentiment in Asia — and potentially “spreading that sentiment” to Europe and the US given that China is the world’s second-largest economy, he said.

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But Stephen Innes, managing partner at SPI Asset Management, warned that a “COVID tsunami in China is coming as the most populous country is forced off a COVID-free slope”, after backing a “very early way to reopen China” some markets. “It will be a tale of two haves in China, as winter oil prices and coronavirus mobility woes give way to hope for an eternal spring in the second quarter.”

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