Thursday 28 March 2024
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Luckin Coffee to pay US$180 million penalty in settlement

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NEW YORK, U.S. — Luckin Coffee Inc. has announced that it has reached a settlement (the “Settlement”) with the United States Securities and Exchange Commission (the “SEC”) regarding the SEC investigation of fabricated transactions perpetrated by certain former executives and employees, as disclosed in the Company’s press release on April 2, 2020. “This settlement with the SEC reflects our cooperation and remediation efforts, and enables the Company to continue with the execution of its business strategy,” said Dr. Jinyi Guo, Chairman and Chief Executive Officer of Luckin Coffee.

“The Company’s Board of Directors and management are committed to a system of strong internal financial controls, and adhering to best practices for compliance and corporate governance.”

In connection with today’s announcement, the SEC has filed the proposed Settlement in the United States District Court for the Southern District of New York (the “Court”) today. The Settlement is subject to the Court’s approval.

Under the terms of the Settlement, the Company, without admitting or denying the allegations of the SEC, consented to the entry of an order (i) requiring the Company to pay a civil money penalty in the amount of US$180 million to the SEC, which shall be offset by any cash payments made by the Company to its security holders pursuant to any schemes of arrangement approved by the Cayman court in the proceeding for the Company’s provisional liquidation and structuring, provided the final distribution plan is not reasonably objectionable to the SEC staff, and (ii) permanently enjoining the Company from violations of certain federal securities laws, including Section 10(b) of the Securities Exchange Act of 1934.

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In settling this matter, the SEC acknowledged that the Company self-reported the fabricated transactions to the SEC staff, cooperated with the SEC throughout its investigation and promptly undertook significant remedial efforts.

These efforts included initiating an internal investigation, terminating certain personnel, terminating relationships with third parties involved in the fraudulent conduct, reorganizing its finance department and adding internal accounting controls.

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