China Securities Regulatory Commission Begins Luckin Coffee Investigation
The China Securities Regulatory Commission (CSRC) has sent an investigative team to inquire into fraud allegations against Luckin Coffee. Additionally, several auditors are currently inspecting Luckin’s financial situation.
SEE ALSO: China’s Investors Take Luckin Coffee to Court for Painful Stock Loss
Since Luckin Coffee’s financial fraud surfaced on April 2, Chinese financial regulators have been closely observing the company. The CSRC stated on April 3 that it strongly condemned financial fraud “regardless of where the company is listed, as listed companies should strictly abide by the laws and rules of the relevant market and fulfil their information disclosure obligations in a true, accurate and complete manner.”
At a press conference held on the morning of April 22, Cao Yu, vice chairman of the China Banking and Insurance Regulatory Commission (CBIRC), also noted: “The financial fraud incident of Luckin Coffee is bad in nature and bears a profound lesson.”
A person close to the CSRC stated that the revised “Securities Law of the People’s Republic of China”, which came into effect on March 1, 2020, gave the comission “long arm jurisdiction” that now spans securities issuance and trading outside the People’s Republic of China. Any activity that disrupts the market order within the People’s Republic of China and damages the legitimate rights and interests of domestic investors willl be dealt with and investigated in accordance with the relevant provisions of this law.
The Securities and Exchange Commission of the United States issued another document on April 22 to warn investors that there are significant financial risks in emerging market investments.