NEW YORK – United States securities regulators fined China’s Luckin Coffee US$180 million (RM729 million) for defrauding investors over its financial performance, officials announced yesterday.
The embattled chain, once seen as a potential rival to Starbucks in China, intentionally fabricated more than US$300 million in retail sales to “falsely appear to achieve rapid growth”, according to allegations from the US Securities and Exchange Commission (SEC).
The alleged scam was overseen by executives and senior managers, who “created a fake operations database and altered bank records to hide their misconduct from the company's finance department and others”, the SEC complaint said.
The company raised more than US$864 million from debt and equity investors during the alleged fraud between April last year and January this year, said the commission, which described the investigation as “continuing”.
Luckin chief executive Jinyi Juo said the settlement “reflects our cooperation and remediation efforts, and enables the company to continue with the execution of its business strategy”, according to a company press release.
“The company’s board of directors and management are committed to a system of strong internal financial controls, and adhering to best practices for compliance and corporate governance.”
Luckin is incorporated in the Cayman Islands with principal business in Fujian, China.
Shares of Luckin plunged more than 75% after the company on April 2 announced it was suspending its chief operating officer among other employees due to “certain misconduct” connected to fabricated transactions.
Nasdaq delisted the company in July. – AFP, December 17, 2020
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