Luckin Coffee to pay US$180 million to settle SEC charges of accounting fraud as it inflated numbers to rival Starbucks
- Luckin Coffee agrees to settlement without admitting or denying wrongdoing
- SEC said Luckin Coffee fabricated more than US$300 million in sales between April 2019 and January 2020
Luckin Coffee agreed to pay US$180 million to settle allegations by the US Securities and Exchange Commission (SEC) that it had engaged in scam accounting to make its financial performance appear healthier than it was.
The start-up based in the Fujian provincial city of Xiamen, which claimed to be China’s answer to Starbucks, was accused by the SEC of fabricating more than 2.12 billion yuan (US$311 million) in retail sales between April 2019 and January 2020, while understating its net loss by as much as 34 per cent. The company also inflated its expenses by more than US$190 million to cover up the fabricated revenues, the SEC said.
The penalty is the biggest meted out to a US-listed Chinese company since executives of Puda Coal were slapped with a US$250 million penalty in 2015 for looting the company.