The US Securities and Exchange Commission has reported that it is investigating Luckin Coffee in China. It has also been reported that the State Administration for Market Regulation in China has launched an investigation into Luckin Coffee.
Earlier this month, an investigation in Luckin Coffee revealed that its chief operating officer and other employees were suspended for fabricated sales deals worth about 2.2 billion yuan ($310.77 million).
Shares in the company fell steeply on 2 April after it disclosed that it was investigating accounting irregularities.
In a regulatory filing with the SEC, Luckin Coffee said that its board had formed a committee to look into irregularities. The company also said that beginning in the second quarter of 2019, chief operating officer Jian Liu and several other unnamed individuals ‘had engaged in misconduct, including fabricating certain transactions.’
The company said Mr. Liu had been suspended and added that fabricated transactions amounting to approximately US$310 million had been discovered relating to the period between the company’s second-quarter and fourth quarter. The company’s share price on Nasdaq fell by more than 80 percent as a result of the disclosure.
On 21 April 2020, the company received a letter of resignation from Thomas P Meier, who was appointed as an independent director of the board in May 2019.