China Securities Regulator To Probe Luckin Coffee

The People's Republic of China securities regulator said Friday that it will investigate Luckin Coffee Inc.'s LK finances, as reported by Reuters.

What Happened

The China Securities Regulatory Commission "strongly condemns" financial misconduct by Luckin, the report said. 

The matter will be investigated and the agency said it will crack down on securities fraud, Reuters reported. 

In a filing with the United States Securities and Exchange Commission, Luckin withdrew its previous financial statements. The coffee chain company said that an internal investigation found that Chief Operating Officer Jian Liu had fabricated transactions over the past year.

Luckin Coffee has been a major competitor to Starbucks Corporation SBUX in China, and has surpassed the Seattle-based giant in terms of the number of outlets operating in the country.

LK Price Action

Luckin's shares closed 75.57% lower at $6.40 on Thursday. The stock was down another 1.95% at $6.28 at the time of publication Friday. 

Photo by N509FZ via Wikimedia.