Twitter whistleblower; Nikola founder; and ex-Uber exec trial: legal stories to watch

This week Yahoo Finance is watching for developments in two federal cases against former executives of public companies. One case involves Nikola (NKLA) founder Trevor Milton, who's accused of lying to investors about his electric truck startup's technology. The other accuses Uber's (UBER) one-time security chief, Joe Sullivan, of covering up a 2016 data breach.

We're also anticipating the Congressional testimony of Twitter whistleblower Peiter "Mudge" Zatko, the company's former head of security, who is scheduled to answer questions on Tuesday posed by members of the Senate Judiciary Committee.

Nikola founder faces federal fraud trial

Nikola founder Trevor Milton is scheduled to stand trial this week in a federal fraud case accusing him of illegally deceiving retail investors in his electric- and hydrogen-fueled truck company.

CEO and founder of U.S. Nikola, Trevor Milton speaks during presentation of its new full-electric and hydrogen fuel-cell battery trucks in partnership with CNH Industrial, at an event in Turin, Italy December 2, 2019. REUTERS/Massimo Pinca (Massimo Pinca / reuters)

The company made its public debut in June 2020 in a reverse merger with VectoIQ Acquisition, a special purpose acquisition company (SPAC). New York prosecutors filed a complaint against Milton in July alleging the founder’s “ubiquitous" presences across social media and TV deceived investors about the status of the company. Prosecutors allege that he used these platforms to spread numerous false claims to artificially inflate Nikola's stock price.

"Before Nikola had produced a single commercial product or had any revenues from truck or fuel sales, Milton embarked on a relentless public relations blitz aimed at a class of investors he called 'Robinhood investors,” the lawsuit states. "Milton ultimately reaped tens of millions of dollars in personal benefits as a result of his misconduct."

Milton is accused of spreading multiple lies about the company's capabilities, including Nikola's prototype semi truck; Nikola One, its "Badger" pickup truck prototype; and its construction of a purported hydrogen fuel network. Milton also allegedly lied about Nikola's "game changing" battery technology. Prosecutors further contend that Milton claimed the company had taken in “billions and billions and billions and billions” of dollars of committed truck orders.

Jury selection in the case began on Monday.

Twitter whistleblower testifies before Congress

Whistleblower Peiter “Mudge” Zatko — who filed a complaint with federal authorizes claiming Twitter’s (TWTR) executives turned a blind eye to cybersecurity risks — is scheduled to testify before the Senate Judiciary Committee at 10 a.m. Eastern Time Tuesday.

Peiter Zatko, widely known by his hacker handle Mudge, is seen in this undated U.S. federal government photo. U.S. federal government/Handout via REUTERS ATTENTION EDITORS - THIS IMAGE WAS PROVIDED BY A THIRD PARTY. (Handout . / reuters)

Committee members are slated to question Zatko, Twitter's former head of security, about his contention that Twitter failed to maintain security measures meant to thwart the posts of malicious foreign actors, and in doing so, violated a 2011 settlement agreement with the Federal Trade Commission.

Zatko’s testimony will be closely watched for its potential to impact Twitter’s lawsuit against Tesla (TSLA) CEO Elon Musk. Twitter is asking a Delaware court to force the billionaire to carry through with his offer to acquire the platform's outstanding common stock for $44 billion.

Uber's ex-security chief faces criminal trial

Another data security executive, Joe Sullivan, is embroiled in a high-stakes legal dispute that's unfolding in a San Francisco federal court, this week.

Sullivan — Uber's one-time chief security officer, and a former federal prosecutor— is facing criminal charges that he covered up a 2016 data breach exposing the personal information of about 600,000 drivers and 57 million riders and drivers. Sullivan pleaded not guilty to the charges.

In a two-count indictment charging Sullivan with obstructing justice and failing to report a known felony to authorities, prosecutors allege that Uber, under Sullivan's direction, wrongfully withheld the data breach from its users, drivers, and Federal Trade Commission. At the time, the FTC was investigating the company's privacy and security protocols. The agency later reached a settlement with the company that mandates it to disclose security incidents, keep records of bounty payments, and submit to third-party audits of its privacy program.

Alexis Keenan is a legal reporter for Yahoo Finance. Follow Alexis on Twitter @alexiskweed.

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