Luckin Boss May Face Criminal Charges for Fraud

By Barnaby Lofton, June 9, 2020

0 0

Luckin Coffee’s Lu Zhengyao is in deep water. Over the weekend, Caixin reported that the chairman of the Chinese coffee chain may face criminal charges in China following an email discovery that showed Lu had told his colleagues to commit fraud. Shares of the NASDAQ-listed company fell 13% on Monday following the report.

Multiple sources familiar to the investigation told Caixin that evidence was found that Luckin had also paid taxes on fabricated transactions. In early April, the NASDAQ-listed company admitted to inflating transaction volume by RMB2.2 billion last year, sparking a rapid sell-off of shares on April 6. In late April, Chinese authorities opened an investigation and raided the company’s Xiamen headquarters.

READ MORE: Luckin Coffee Headquarters Raided by Chinese Market Regulators

Luckin received a delisting notice from NASDAQ in mid-May, but has already requested a hearing which could take place in as early as a couple weeks. Luckin’s spring scandal has not only put the coffee chain on blast, but has also negatively impacted other Chinese companies currently listed on US stock exchanges.

On June 4, the Trump administration issued a memorandum titled ‘Protecting United States Investors from Significant Risks from Chinese Companies,’ which called for “firm, orderly action to end the Chinese practice of flouting American transparency requirements without negatively affecting American investors and financial markets.”

Chinese tech giants JD and Baidu are reportedly eyeing secondary listings in Hong Kong, Fortune reports. Charles Li, CEO of Hong Kong Exchanges and Clearing, attributes the interest to re-list in China to greater scrutiny from the US and a 2018 policy change that allows companies to list dual-class shares on the Hong Kong exchange.

READ MORE: Score Cheap Coffee on This Popular App Before It's Too Late

[Cover image via @luckincoffee瑞幸咖啡/Weibo]

more news

What to Know about China's Major Stock Exchanges

a brief background and explanation on what gets traded in each exchange, and advice on how to access them.

Mutual Funds or Exchange-Traded Funds, Which Are Best for You?

Here are the similarities and differences between mutual funds and exchange-traded funds (ETFs).

Luckin Coffee Headquarters Raided by Chinese Market Regulators

The State Administration for Market Regulation (SAMR) raided the coffee company’s Xiamen headquarters on April 26

Coffee Shop Staffer Tests Positive for COVID-19 in Guangzhou

Starbucks announced heightened protection measures for all its Guangzhou locations.

Score Cheap Coffee on This Popular App Before It's Too Late

Be sure to take advantage of free and discounted mocha in case Luckin locations start to disappear.

This Day in History: The 2007 China Stock Market Crash

On February 27, 2007 the 'Shanghai Sneeze' triggered major drops in worldwide stock markets.

Chinese Barista Wins World Coffee Competition

Du Jianing, a Nanjing-based barista, recently put China on the mocha map after winning the 2019 World Brewers Cup.

'Luckin' for Gold: Chinese Coffee Company Eyeing Huge IPO

Arguably Starbuck’s biggest competitor in the PRC, the Chinese coffee brand has expanded at breakneck speed over the last two years.

0 User Comments

In Case You Missed It…

We're on WeChat!

Scan our QR Code at right or follow us at thatsonline for events, guides, giveaways and much more!

7 Days in China With thatsmags.com

Weekly updates to your email inbox every Wednesday

Subscribe

Download previous issues

Never miss an issue of That's Magazines!

Visit the archives