Luckin Coffee Chairman Reportedly Ousted As Internal Probe Finds Wrongdoing

Luckin Coffee Inc. LKNCY Chairman Charles Zhengyao Lu was ousted from his role at the company in a shareholders meeting on Sunday, Bloomberg reported.

What Happened

Lu had called the "extraordinary general meeting," as he also sought removal of one of the independent members of the Luckin board, Sean Shao.

According to local media sources, Shao, along with two other board members, has also been forced out, Bloomberg noted.

A separate report from the Wall Street Journal said that an internal investigation of the company found that Lu knew or should have known about the $310 million securities fraud at the company.

Lu also didn't fully cooperate with the investigation conducted by a special committee of Luckin's board and law firm Kirkland & Ellis LLP, the people familiar with the matter told the Journal.

The probe found evidence that Lu had knowledge of some of the fabricated transactions but failed to disclose them, the Journal reported.

Lu dubbed the report of the probe as "rumor" in a statement to the Journal.

Price Action

Luckin shares closed nearly 3.5% lower at $2.52 in the otc market on Thursday. The company's shares are in the process of getting listed from the Nasdaq Stock Market.