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December 16, 2020

Posted  December 16, 2020

China-based Luckin Coffee will pay a penalty of $180 million to resolve charges that the company defrauded investors by materially misstating the its revenue, expenses, and net operating loss in an effort to falsely appear to achieve rapid growth and increased profitability and to meet earnings estimates. The SEC alleged that over the course of more than a year, Luckin intentionally fabricated more than $300 million in retail sales, and $190 million in expenses, by using related parties to create false transactions and inflated expenses. Luckin overstated its revenue by 28% and 45% in two different quarters, and raised more than $864 million from debt and equity investors during the relevant time period. Luckin ADRs were traded on NASDAQ until July, 2020.  SEC

Tagged in: Accounting Fraud, Financial and Investment Fraud, Misrepresentations, Securities Fraud,

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