Manager Martin Allen revealed at a press conference last week that the club were looking into ‘allegations’ surrounding the defender.
The Derbyshire Times understands that not long after Allen spoke to the media, Nicholson’s time with the club was brought to an end by mutual consent.
Speaking early on Thursday afternoon Allen said: “There is an update on Brad.
“There is an ongoing process, from a little bit above me, into allegations about Brad.
“I can’t really say anymore until that process has taken place.”
Former Spireites boss Jack Lester confirmed in February that they had a Handsworth player on trial with the first team and Nicholson apparently impressed sufficiently to earn a six month deal at the Proact.
The length of his deal was revealed by Allen the day after he took charge of the Spireites, but teenager Nicholson was hampered in pre-season training by a damaged wrist.
He broke into men’s football at Evo-Stik side Sheffield FC and continued his development at Handsworth last season in the NCEL Premier Division.