An Activist Short Seller Gets His Day in Court

That whirlwind of events thrust Mr. Anderson, a virtual unknown on Wall Street, into the spotlight. The story of how he took down one of the buzziest E.V. start-ups on the market — within a week of Nikola’s initial public offering in June 2020, investors had pushed its valuation above $34 billion, overtaking Ford Motor — was splashed across the business pages and featured in podcasts.

The Milton case wasn’t the first time Mr. Anderson’s muckraking led to a criminal trial, but the stakes never felt higher for him and Hindenburg. Still, Mr. Anderson had doubted that Mr. Milton’s trial would result in a conviction. Convincing a jury that the director of a publicly listed company committed securities fraud is a much taller task than persuading investors to join your crusade to short that same company, he realized.

“I think it’s often daunting for prosecutors to bring big cases like this,” he said, “because when you get into the courtroom, you need to get a consensus of 12 normal people who might not have familiarity with things like the stock markets or, you know, the kind of corporate legalese that goes into all these sorts of cases.”

When the jury found Mr. Milton guilty last week on three fraud charges, the biggest of which carries a 20-year prison term, Mr. Anderson felt vindicated. “I think it’s a significant victory for white-collar criminal prosecution in America, really,” he said.

On the day the jury read the verdict, Mr. Anderson congratulated those he saw as the “good guys,” including the whistle-blower informants “who worked with us.” For the doubters, he served his tweets cold, suggesting, for example, that an equity analyst who stuck by Nikola after the original Hindenburg report should be entered into “the sell-side research hall of shame.”

The moment of vindication arrived as activist short sellers are facing more scrutiny than ever before.

Article source: https://www.nytimes.com/2022/10/22/business/dealbook/nathan-anderson-nikola-trial.html