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Luckin Coffee to pay $180 million penalty to settle accounting fraud charges -U.S. SEC

Luckin Coffee to pay $180 million penalty to settle accounting fraud charges -U.S. SEC

December 16, 2020

By Katanga Johnson

(Reuters) – Luckin Coffee Inc has agreed to pay a $180 million penalty to settle accounting fraud charges for “intentionally and materially” overstating its 2019 revenue and understating a net loss, U.S. regulators said on Wednesday.

The U.S. Securities and Commission (SEC) fine on the China-based rival to Starbucks comes after it said earlier this year that much of its 2019 sales were fabricated, sending its shares plunging and sparking an investigation by China’s securities regulator and the SEC.

The SEC said it found that Luckin “intentionally and materially overstated its reported revenue and expenses and materially understated its net loss in its publicly disclosed financial statements in 2019.”

Luckin has not admitted or denied the charges, the SEC said. The company has agreed to pay the penalty, which may be offset by certain payments it makes to its security holders in connection with its provisional liquidation proceeding in the Cayman Islands.

The transfer of funds to the security holders will be subject to approval by Chinese authorities.

“Public issuers who access our markets, regardless of where they are located, must not provide false or misleading information to investors,” said SEC Director of Enforcement, Stephanie Avakian in a statement.

“While there are challenges in our ability to effectively hold foreign issuers and their officers and directors accountable to the same extent as U.S. issuers and persons, we will continue to use all our available resources to protect investors when foreign issuers violate the federal securities laws,” she said.

(Reporting By Katanga Johnson; Editing by Bill Berkrot)

The post Luckin Coffee to pay 0 million penalty to settle accounting fraud charges -U.S. SEC first appeared on One America News Network.

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