Shares of electric truck maker Nikola fell 34% on Monday after founder Trevor Milton stepped down as executive chairman following a public squabble with a short-seller over allegations of nepotism and fraud, Reuters reported.
The report said the embattled company named Stephen Girsky, former vice chairman of General Motors and a member of Nikola's board, as chairman, effective immediately.
Short seller Hindenburg Research had said in a scathing report earlier this month it had gathered enough evidence to show that Nikola and Milton made false claims about the company's proprietary technology to form partnerships with large automakers.
"The focus should be on the Company and its world-changing mission, not me. So I made the difficult decision to approach the Board and volunteer to step aside as Executive Chairman," Reuters quoted Milton, who owns about 20% of the company, as saying.
"I intend to defend myself against false allegations leveled against me by outside detractors," he said in a tweet.
According to Reuters, Hindenburg also alleged Milton appointed his brother, Travis, to lead the a unit in the company despite not having any substantial experience related to the sector.
The report said Nikola had rejected all the accusations and threatened to take legal action against Hindenburg. The US Department of Justice and the US Securities and Exchange Commission had been probing the claims made in the report, according to reports last week seen by Reuters.
Reuters noted Hindenburg's report came soon after Nikola sealed a partnership with GM, which took an 11% stake in the company for about US$2bn and agreed to work together to make electric pickup trucks to take on Tesla.
The US Securities and Exchange Commission (SEC) is probing Nikola to assess the merits of short-seller Hindenburg's allegations, Reuters said, citing a Bloomberg News report last week.
Nikola had said it briefed the SEC on concerns pertaining to the report.