MILAN — Luckin Coffee Inc. announced yesterday that on May 15, 2020, it received a written notice from the Listing Qualifications Staff of The Nasdaq Stock Market indicating that the Listing Qualifications Staff has determined to delist the Company’s securities from Nasdaq.
The Listing Qualifications Staff cited two bases for the delisting determination: (i) public interest concerns as raised by the fabricated transactions disclosed by the Company in a Form 6-K on April 2, 2020, pursuant to Nasdaq Listing Rule 5101; and (ii) the Company’s past failure to publicly disclose material information, citing a business model through which the previously disclosed fabricated transactions were executed, pursuant to Nasdaq Listing Rule 5250.
Luckin Coffee plans to timely request a hearing (the “Hearing”) before a Nasdaq Hearings Panel (the “Panel”).
The Company will remain listed on Nasdaq, pending the outcome of the Hearing. There can be no assurance that the Panel will grant the Company’s request for continued listing.
According to the Notice, the Hearing will typically be scheduled to occur approximately 30 to 45 days after the date of the hearing request.
Meanwhile, the Nasdaq announced that trading in Luckin Coffee Inc. is scheduled to resume on Wednesday, May 20, 2020, at 7:00 a.m. Eastern Time.
Trading in the company’s stock was halted on April 7, 2020 at 9:15:25 Eastern Time.
Why Nasdaq wants to delist Luckin Coffee
Luckin Coffee, which had a U.S. IPO in early 2019, disclosed on April 2 that an internal probe found that Jian Liu, its COO at the time, had fabricated 2019 sales.
Its shares had plummeted 83% since disclosing the fraud, putting its market value at $1 billion.
A week ago, Luckin said that it fired its CEO and COO as part of its internal investigation into the sales fraud. The company said then that the investigation is still ongoing and it is cooperating with regulatory agencies in both the United States and China.
The coffee chain has continued to operate during the probe.