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Nikola, which went public via a SPAC, is accused of deception

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Electric-truck maker Nikola led the wave of mergers with blank-check companies this year.

In March, it agreed to merge with VectoIQ Acquisition Corp., a SPAC created solely with the purpose of acquiring another business, with Fidelity and ValueAct supporting the deal with a $525 million private placement. And riding on Tesla’s soaring stock as well as a recent partnership with General Motors, Nikola’s valuation has exploded to $14 billion (compare that to its $3.3 billion price tag when its plan to go public was first announced).

On Thursday, Hindenburg Research, a short seller betting against the zero-emissions startup, accused Nikola of making a series of deceptive public statements and false representations regarding its technology and business in a scathing report.

Per my colleague David Z. Morris, it makes a claim that is somewhat…unintentionally comedic:

“The Hindenburg report’s most striking claim is that a January 2018 video purportedly showing a Nikola One hydrogen fuel-cell semi truck moving under its own power was staged. According to Hindenburg, the video in fact showed the truck rolling down a long, gentle slope. Hindenburg’s report includes a test confirming that the section of road shown in the video could accelerate a coasting vehicle to highway speeds, along with text messages from a former Nikola employee appearing to confirm the tactics.

Given these claims, it is notable that Nikola repeatedly described the video as showing the truck “in motion,” which would be technically true even if the truck were not moving under its own power.”

Nikola refuted the allegations, calling Hindenberg’s report a “hit job for short sale profit driven by greed.” The company made allusions to potential legal action and also said it plans to bring the report to the attention of the Securities of Exchange Commission.

Of course, short sellers are sometimes wrong and they do have financial incentive to burnish a company’s image. But they’ve also been very, very right before.

And this brings me back to Nikola’s decision to go public via SPAC: Despite the financing method’s raging popularity in 2020, SPACs are still trying to shed their historical association with fraud. And while proponents emphasize the limited risk of investing in a SPAC before it finds an acquisition target (with funds going typically into, say, U.S. treasuries), it remains to be seen what comes after.

EVERLANE RAISES: Everlane, the sustainable fashion brand that has been accused of failing to live up to its ethical image, has raised $85 million in Series F funding led by L Catterton. 

The new funding comes after former employees accused the company of anti-Black behavior and of selling an image “to the world that did not reflect their damaging experiences inside the company,” per the New York Times in July. Everlane later announced that the Chief Creative Officer Alexandra Spunt, who took much of the criticism, would no longer lead the creative team. In response to the report, Everlane CEO Michael Preysman told the Times that the company would open up a seat for a Black board member, roll out anti-racism training, and add a Black person to the senior leadership team.

With the most recent funding round, Everlane added Jonathan Mildenhall, CEO of TwentyFirstCenturyBrand, and Matt Leeds, Partner at L Catterton, to its board of directors. Mildenhall is of a mixed-race background.

Lucinda Shen
Twitter: @shenlucinda
Email: lucinda.shen@fortune.com

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One pandemic, two recoveries: New Yorkers are three times more likely to be jobless than Nebraskans

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It’s going to take a long time to get out of this economic mess, but we’re making progress: Since the end of April, the economy has added more than 10 million jobs and the unemployment rate has fallen from its peak of 14.7% to 8.4%.

But that national recovery is unequal. Employment in some states is back to pre-pandemic levels, while others are at mass joblessness levels surpassing the 2007-09 Great Recession.

When the pandemic hit, the jobless rate in Nebraska soared from 4% in March to 8.7% in April. But the state’s nearly fully reopened economy has helped push the jobless rate back to 4% as of August.

The picture in New York, the epicenter of the pandemic in the spring, is far less rosy. It saw its jobless rate climb from 4.1% in March to a staggering 15.3% by April. It has since improved to 12.5% in August—a figure that is still above the U.S. peak of 8.9% jobless rate during the Great Recession era.

How can a New Yorker be three times more likely to be jobless than a Nebraskan?

States like Nebraska that are more rural and haven’t been as hard hit by the pandemic have almost fully reopened. Earlier this month Nebraska allowed outdoor gatherings to reopen at 100%, including sports stadiums and fairgrounds. And places like bars and tattoo parlors were reopened weeks ago.

Northeast states like New Jersey, New York, and Connecticut were hit hard by the virus in the spring and are reopening businesses at much slower rates. Case in point: Indoor dinning in New York City doesn’t start back until September 30, and that’s only at 25% capacity. That cautious approach explains why New York’s jobless rate remains so high.

While New York leads the nation at 33,092 lives lost to the pandemic, its case load and deaths are plummeting, according to Johns Hopkins University data. Only .9% of COVID-19 tests in New York are coming back positive compared to over 50% at one point in April. Nebraska has far fewer COVID-19 deaths (452), however, its positive rate is 12.6%—which is above the 10% threshold that adds incoming travelers to New York’s 14-day quarantine.

And joblessness in New York is also elevated by its large leisure and hospitality concentration. That sector was smashed by the pandemic, and has yet to rebound. Leisure and hospitality jobs in New York City alone are still down 48%. And that’s also why joblessness is still so high in tourism heavy California (11.4%), Hawaii (12.5%), and Nevada (13.2%).

While Florida also has a massive tourism industry, its jobless rate is only 7.4% in August which can be chalked up to a more aggressive reopening plan than states like Nevada or New York.

More must-read finance coverage from Fortune:

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