A view of Luckin Coffe in Guangzhou, capital of South China's Guangdong Province in December. Photo: VCG

Luckin Coffee, a NASDAQ-listed Chinese company grappling with a financial fraud scandal, has now been under investigation by Chinese security regulators for days, media reported. It is the first time that Chinese authorities have investigated an US-listed company under China's revised Security Law, which could promote joint China-US financial investigations in the future.

China's new Security Law, which legally endorses Chinese regulators to investigate overseas-listed companies, is a big step toward joint investigations between China and other countries, and Luckin's case could mark a breakthrough for joint financial investigations between China and the US, Rukim Kuang, founder of third-party research institution Lens Company Research, told the Global times on Tuesday.

Luckin, a coffee chain rivaling Starbucks in China that went public in the US just 18 months after it was founded, has been under the spotlight since it revealed on April 2 that one of its high-level executives had been involved in financial fraud. The announcement has since drawn the attention of Chinese regulators.

An official of the China Securities Regulatory Commission (CSRC) on Monday said that since Luckin first revealed the issue, the CSRC has been communicating with the US Securities and Exchange Commission and has received active responses from the agency, media reported.

The company also on the same day said on China's Twitter-like Weibo that it is actively cooperating with Chinese market regulators in their investigation of its operations and that all of its stores nationwide are operating normally.

China's revised Security Law empowers Chinese regulators to investigate overseas-listed companies if they are suspected of disrupting Chinese market order or damaging domestic investors' interests. It came into effect on March 1, and Luckin's case is the first resulting investigation.

There had previously been several financial investigations jointly undertaken between China and the US. However, under the old version of the Security Law, Chinese regulators had no obligation to investigate overseas-listed Chinese companies and due to structural differences in security laws, cooperation had not been very smooth, according to Kuang.

"But now, since March 1, the revised law has provided legal basis for joint investigations, and will eventually promote cooperation on the crackdown on economic crimes," Kuang said.