By Matthew Russell Lee, Patreon Maxwell book
BBC - Honduras - CIA Trial book - NY Mag
SDNY COURTHOUSE, Sept 23 – The trial of Nikola founder Trevor Milton for wire and securities fraud moved, on September 23, past the social media professor Dina Mayzlin to Nikola CFA Kim Brady. Inner City Press was there. Thread:
Torrey Young: Let's consider August 4 - was this stock spike caused by the earnings call? Mayzlin: That seems reasonable. Torrey Young: On July 29, were you aware the company posted press releases? Mayzlin: I was not aware.
Torrey Young: Your source here was from Listen Notes dot com - did you contact them? Mayzlin: No, it was public information. Torrey Young: The "This Week in Start-ups" podcast, is the ranking only for the episode with Mr. Milton? Mayzlin: No.
Torrey Young: You called Trevor Milton a macro influencer. Isn't it true that there are pets that are macro influencers? Mayzlin: I don't think a non human can be an influencer. Torrey Young: But there are accounts associated with pets... Re-direct. AUSA Roos: Did you find causality?
Mayzlin: Yes, his tweet about the Badger. It was the only cause, I mean, cause along with the re-tweets. AUSA Roos: This Trevor Milton's head on the body of a warrior with a sword. Mayzlin: Yes, it's Game of Emissions
Mayzlin: It's a meme-y, Internet-y thing, instead of "Winter Is Coming" is says "Hydrogen Is Coming." AUSA: No further questions. Torrey Young: You were not aware that on June 9 Nikola posted about the Badger, were you? Mayzlin: I was not. Young: Nothing further
AUSA Podolsky: The government calls Kim Brady. Q: Where do you work. Brady: Nikola, since Nov 2017. I am the CFO... AUSA: Were Mr Milton's public statements accurate?
Brady: No. They could be inaccurate or exaggerated.AUSA: Did you speak to him about his hyper-focus on retail investors?
Brady: Yes. We were concerned. Nikola was a story stock. So we had to be careful, retail investors do not have experience -- Milton's Mukasey: Objection! Judge Ramos: Overruled.
AUSA: Did Mr. Milton link his statements to the stock price? Brady: Yes. He would point at a rise, to what he had said.
AUSA: In going public through the SPAC, did institutional investors have concerns? Brady: Yes. That Trevor Milton was not prepared to be the CEO of a publicly traded company.
Brady: They wanted a stock lock-up. But at Mr. Milton's insistence, we got a $70 million carve-out. AUSA: Was that all of his stock? Brady: No. Only a small fraction. AUSA: What do you mean when you call Nikola a story stock?
Mukasey: Objection! Judge Ramos: Overruled. Brady: Story stock has no financial fundamentals. So there is speculation, triggered by what the management may say. I told Trevor it had to be accurate.
Now Kim Brady is going over a memo he wrote, that at this point 95% of the trading in Nikola is/was high frequency or retail traders. Mukasey: Sidebar. Or I want to voir dire the witness. Another sidebar ensues.
They're back. Kim Brady: I told Mr. Milton to focus less on social media and more on long term value. AUSA: What do you mean by milestones? Brady: The targets we should meet, like build out h2 infrastructure AUSA: Had you done it? Brady: No.
AUSA: Do you use social media? CFO Kim Brady: No. AUSA: What was your estimate for the Badger? Brady: Loss of $3.2 billion over 5 years.
AUSA: What are the assumptions here about hydrogen? Brady: Electricity price has greatest sensitivity. You need it for electrolyzers. We needed it at 3.5 cents per kilowatt hour.
AUSA: Had you obtained it at that price? Brady: No.
AUSA: So you had concerns about Mr. Milton's communications - can you explain? Kim Brady: It is highly unusual for a CEO to communicate with retail investors on social media, other than Elon Musk...
AUSA: Were you aware of this podcast, what was it called? Kim Brady: Something about Telsa. I got an email from Elizabeth [Fretheim]. AUSA: Did you speak with Mr. Milton? Brady: Yes, I discussed with Mark Russell and Britton-
Mukasey: Objection! Non responsive!
Brady: Yes, Milton was spoken with...
AUSA: Was there any basis to say that Nikola could convert 80% of its reservations to binding contracts? Brady: No.
Brady: All three of us met with Trevor, to express our frustration. Excessive presence on social media. AUSA: What did you tell him? Brady: That he should vet everything. AUSA: What did Mr. Milton say? Brady: I think he was highly disappointed
Brady: Trevor told Mark he had to decide if he was with him, or not. Afterward Mark told me -- Mukasey: Objection. Hearsay.
AUSA: Did you observe any changes in Mr. Milton's conduct? Brady: Yes. AUSA Was there a meeting after the short sellers report? Brady: Yes.
Judge Ramos: Cross examination.
Milton's Mukasey: How much stock were you granted in Nikola as a base of your compensation?
Kim Brady: 320,000 shares.
Mukasey: And bonus?
Brady: Up to 2.59 million shares.
Mukasey: How many options do you own? Brady: $43 million.
Mukasey: Before Nikola, you'd been in the securities business for 20 years, right?
Brady: Yes.
Mukasey: You passed tests, Series 7, with an ethics and honesty test, correct?
Brady: Yes. Mukasey: You supervised all accounting and treasury functions? Brady: Yes.
Musakey: You could report misconduct to the SEC, correct? Brady: Yes.
Mukasey: Before the company went public, you underwent training by a law firm on the responsibilities of a CFO in a public company. Brady: Yes.
Mukasey: I show you now the answers you sent to Hanhwa. It talks about a company called Nel, right? Brady: Yes.
Mukasey: And you wrote "Nikola is building," in the present tense. Brady: Yes, but --
Mukasey: You can say whatever you want on re-direct. Just yes or no. AUSA: Objection! Argumentative! Judge Ramos: Sustained.
Mukasey: This is an email to you from Brett Williams and KL Gates, that's a law firm, right? Brady: Yes.
Mukasey: Are you aware of an investor known as Nimbus? Brady: Yes. AUSA: Could we have a sidebar about this exhibit? Judge Ramos: Yes. [Whispers]
Mukasey: There were different options for going public - an IPO in the US, or an IPO in Norway, which you say Trevor was in favor of - but you favored a SPAC, right?
Brady: Yes, but let me explain the context-- Mukasey: Let me ask the questions.
Mukasey: Yes or no, did you want to go SPAC? Brady: There was uncertainty, the world was shutting down -- Mukasey: It was your preference to go with SPAC?
Brady: Correct. Mukasey: Is it fair to say Trevor was somewhat naive about the stock market? Brady: Not really. On the retail --
Mukasey: OK, let's go there. You wanted to focus on the fat cats, no? Brady: No.... Mukasey: Investors like Blackrock.
Mukasey: You had a business disagreement with Trevor on the kind of investors the company should focus on, correct?
Brady: Different ideas, yes. Mukasey: Trevor wanted you to call Nasdaq because he thought it was broken, right? Brady: That's your word.
Brady: He told me he thought there was something wrong with the Nasdaq trading. Mukasey: And he was wrong. Brady: He was.
Mukasey: Everyone in the company knew he was talking a lot about the stock price, correct? Brady: Yes.
Mukasey: Did you ever do a fireside chat? Brady: Yes. Mukasey: What is that? Brady: A one on one interview in front of an audience at an investors' conference.
Mukasey: When Ms. Fretheim raised concerns to you, you didn't go to Trevor, right? Brady: I spoke to Mark
Mukasey: That's not my question. Brady: I have not have gone directly to Trevor --
Mukasey: You don't have a clear recollection. You certainly didn't tell Trevor he must issue a correction, did you?
Brady: No I did not.
Mukasey: Let's turn to your disagreement about the Badger. [Long sidebar discussion]
Mukasey: So here, you paid for the water fountain? Brady: I didn't know it was in there. A CFO does not sign every invoice. I did not agree.
Mukasey: I don't care if you agreed. I only care that you approved it... Your Honor, I'm ready to turn to a new topic.
Judge Ramos: We are at the end of the trial day, the week, a break. Don't read about the case.
Trial will continue after a break.
The case is US v. Milton, 21-cr-478 (Ramos)
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