Luckin Coffee Reports That COO and Other Employees Engaged in Certain Misconduct, Including Fabricating Certain Sales Transactions – Kehoe Law Firm, P.C. Investigating Securities Claims on Behalf of Luckin Coffee Investors
Kehoe Law Firm, P.C. is making investors aware that on April 2, 2020, Lucking Coffee Inc. (“Luckin Coffee” or the “Company”) (NASDAQ: LK) disclosed that the Company’s Special Committee overseeing an internal investigation reported to the Company’s Board of Directors “. . . 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.” [Emphasis added.]
According to Luckin Coffee:
The information identified at this preliminary stage of the Internal Investigation 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 above figure has not been independently verified by the Special Committee, its advisors or the Company’s independent auditor, and is subject to change as the Internal Investigation proceeds. 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 and earning releases for the nine months ended September 30, 2019 and the two quarters starting April 1, 2019 and ended September 30, 2019, including the prior guidance on net revenues from products for the fourth quarter of 2019, and other communications relating to these consolidated financial statements. The investigation is ongoing and the Company will continue to assess its previously published financials and other potential adjustments. [Emphasis added.]
On this news, Luckin shares dropped more than 80% in pre-market trading, thereby injuring LK investors.
Luckin Coffee investors who purchased, or otherwise acquired, LK securities and suffered losses are encouraged to contact either Michael Yarnoff, Esq., (215) 792-6676, Ext. 804, [email protected], [email protected], or John Kehoe, Esq., (215) 792-6676, Ext. 801, [email protected], to discuss the securities investigation or potential legal claims.