SEC charges Luckin Coffee of accounting fraud; Company to pay $180M to resolve the suit

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Luckin Coffee (OTC: LKNCY), the China-based company sued by the U.S. Securities and Exchange Commission (SEC) of accounting fraud, agreed to pay a $180 million to resolve the matter.

The securities regulator filed its lawsuit against the Chinese coffee company in the Southern District of New York.

The SEC sued Luckin Coffee for allegedly violating the antifraud, reporting, books and records, and internal control provisions of the federal securities laws. The Chinese coffee company settled with the Commission without admitting or denying the allegations.

On Wednesday, the SEC and Luckin Coffee released separate statements announcing that they reached a settlement agreement.

Dr. Jinyi Guo, Chairman and Chief Executive Officer of Luckin Coffee, said, “This settlement with the SEC reflects our cooperation and remediation efforts, and enables the Company to continue with the execution of its business strategy.”

SEC allegations against Luckin Coffee

In its complaint, the U.S. securities regulator alleged that the Chinese coffee company defrauded investors by materially misreporting expenses, net operating loss. Its misconduct was driven by its intention to falsely create an appearance that it is growing rapidly and generating profits.