Photo shows a Luckin Coffee shop in Shanghai, east China. Photo: Xinhua

Luckin Coffee, a potential rival to Starbucks, stated on Thursday that it has reached a settlement with US securities regulators on the alleged financial fraud by some of its former executives.
 
At present, the company and its stores continue to operate unaffected, and Luckin Coffee will continue to cooperate with the authorities and strengthening its internal scrutiny, the company said in the statement.

US securities regulators have fined China's Luckin Coffee $180 million for defrauding investors over its financial performance, US securities officials announced on Wednesday.
 
The embattled chain intentionally fabricated more than $300 million in retail sales in order to "falsely appear to achieve rapid growth," according to a statement made by the US Securities and Exchange Commission (SEC).
 
On April 2 this year, Luckin Coffee announced that its chief operating officer Liu Jian and several other employees had been involved in a financial fraud relating to $2.2 billion in transactions, and that the company had set up a special committee to conduct an internal investigation into the matter.
 
In addition, several law firms in the US initiated class action lawsuits against the company for making false and misleading statements and violating US securities laws.
 
On June 29, Luckin Coffee halted trading on the Nasdaq exchange and ended its 400-day listing journey. Luckin Coffee’s stock price was fixed at $1.38 per share, compared to the issue price of $17, a drop of 90 percent.
 
On July 1, the company said its internal probe had been completed, with a special committee concluding that financial fraud began in April 2019, and that the company's 2019 net revenue had been deliberately overvalued by 2.12 billion yuan ($32 million), and operational costs and expenses were exaggerated by 1.34 billion yuan in 2019.
 
China’s market regulator said in July that it has fined a group of 45 companies, including Luckin Coffee, a combined 61 million yuan for illicit acts linked to Luckin’s falsification of financial records and misleading the public, according to Reuters.

Global Times