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China fines Luckin Coffee and linked firms a total of $9 million

09/22/2020 | 12:16am EDT
A woman leaves a store of the Chinese coffee house chain Luckin Coffee in Beijing

China's markets regulator said on Tuesday it has fined a group of 45 firms, including Luckin Coffee, a combined 61 million yuan ($8.98 million) for acts linked to Luckin's falsification of financial records and misleading of the public.

China's finance ministry said earlier this year that Luckin booked 2.25 billion yuan of sales through fake coupons from April 2019 to end of 2019. The ministry's investigation also found that Luckin inflated other figures including its revenue, costs and profit in that same period.

The market regulator said a probe it launched in April found that Luckin violated Chinese laws on inappropriate competition by inflating its operational data, and also misled the public with faked statistics between August 2019 and April this year.

A total of 43 companies were fined for helping Luckin in these activities. Two Luckin entities were involved.

Luckin responded on its Weibo account on Tuesday that it respected the regulator's decision.

"We have carried out an overall rectification on the related issues," the company said: "We will further improve our operations according to related laws and regulations."

Luckin had positioned itself in China as a local and ambitious challenger to U.S. coffee chain Starbucks Corp. Luckin delisted from Nasdaq at the end of June after admitting to accounting fraud.

The company wound up an internal probe in July that found its revenue was inflated by around 2.12 billion yuan in 2019. During the investigation, Luckin sacked its CEO and COO.

(Reporting by Beijing newsroom; Writing by Se Young Lee; Additional reporting by Sophie Yu; Editing by Muralikumar Anantharaman and Raju Gopalakrishnan)

© Reuters 2020
Stocks mentioned in the article
ChangeLast1st jan.
LUCKIN COFFEE INC. 0.33% 9.15 Delayed Quote.7.65%
NASDAQ COMP. -0.92% 14030.375849 Delayed Quote.8.86%
STARBUCKS CORPORATION -1.52% 109.7 Delayed Quote.4.12%
UNITED STATES DOLLAR (B) / CHINESE YUAN IN HONG KONG (USD/CNH) 0.00% 6.45982 Delayed Quote.-0.54%
WEIBO CORPORATION -1.21% 47.55 Delayed Quote.16.03%
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