| In Trevor
Milton Trial Nikola CFO Kim Brady Says
Trevor Wrong on Badger But He Paid For It
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:
OK
- US v. Trevor Milton trial continues, US
social media expert Dina Mayzlin being cross
by Milton's Torrey Young
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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