Where next for Luckin Coffee’s share price amid new fraud details?

Where next for Luckin Coffee’s share price amid new fraud details?

Share price of Nasdaq-listed Chinese coffeeshop chain Luckin Coffee opened 13% lower on Monday 08 June 2020, after it was reported that its chairman Lu Zhengyao may also have been directly involved in recent fraud charges that have plagued the company.To get more news about luckin coffee stock price, you can visit shine news official website.

Lu had allegedly instructed colleagues to commit accounting fraud in a series of emails that have been discovered by Chinese authorities, according to news site Caixin Global.

The report went on to add that China’s Ministry of Finance are currently in possession of evidence that could prove that Luckin Coffee had paid taxes on fabricated transactions, this is according to several people with proximity to the company’s internal investigation team.Gain access to Luckin Coffee and thousands of shares via IG's world-leading trading and investments platform. With CFDs (read about CFDs here), you can buy long or sell short on various asset classes depending on whether you think prices will rise or fall. Start today by opening a live or demo IG account.

This is in addition to earlier developments that had revealed a degree of balance sheet manipulation by other senior company executives and employees.

On 07 April, Nasdaq halted trading of Luckin Coffee’s shares after it admitted in a US Securities and Exchange Commission filing that Jian Liu, chief operating officer and a director of Luckin Coffee Inc., and several of his employees, had ‘engaged in the fabrication of certain transactions’ amounting to around 2.2 billion Chinese yuan in aggregate sales that date back to the second quarter of 2019.

Lu had himself issued the following apology following the uncovering of the fraud: ‘I have been in deep pain and guilt over the past month. I again apologise to all the investors, staff and clients of Luckin for the terrible impact of the incident.’

The Board of Directors then terminated Jenny Zhiya Qian and Jian Liu from their positions of Chief Executive Officer and Chief Operating Officer on 12 May 2020 after further internal investigations. In addition, the company also placed six other employees who were involved in or had the knowledge of the fabricated transactions, on suspension or leave.Following that, on 19 May 2020 – just a day prior to trading being resumed, the company announced that it received a written delisting notice from Nasdaq on 15 May over ‘public interest concerns’ regarding the fabricated transactions disclosed by the company.

Luckin Coffee had stated that it plans to request a hearing on the delisting. Hearings will typically be scheduled to occur approximately 30 to 45 days after the date of the hearing request.

For now, Luckin Coffee will remain listed on Nasdaq, pending the hearing’s outcome. However, there can be no assurance that the panel will grant the company’s request for continued listing, according to Nasdaq.

Despite the stream of controversy, Luckin Coffee’s share price was still able to rally over 50% last Friday 05 June, in line with improved market sentiments globally.