Luckin Coffee has notified the SEC and the public that it’s Board has formed a Special Committee, along with attorneys and forensic accountants to investigate allegations that beginning in the second quarter of 2019, Mr. Jian Liu, the chief operating officer and a director of the Company, and several employees reporting to him, had engaged in certain misconduct, including fabricating certain transactions. The Special Committee recommended certain interim remedial measures, including the suspension of Mr. Jian Liu and such employees implicated in the misconduct and the suspension and termination of contracts and dealings with the parties involved in the identified fabricated transactions. The Board accepted the Special Committee’s recommendations and implemented them.
The investigation indicates indicates that the aggregate sales amount associated with the fabricated transactions from the second quarter of 2019 to the fourth quarter of 2019 amount to around RMB2.2 billion. Certain costs and expenses were also substantially inflated by fabricated transactions during this period. The Company is assessing the overall financial impact of the misconduct on its financial statements.
As a result, investors should no longer rely upon the Company’s previous financial statements for the period ended September 30, 2019 and the two quarters starting April 1, 2019 and ended September 30, 2019.
Fraudulent or misleading financial statements can cause significant harm to investors. If you are an investor in Luckin Coffee (LK) contact Sallah Astarita & Cox, LLC – 212-509-6544