Case Study: Luckin Coffee
Accounting Fraud
August 27, 2021
By Emma Chung
The following describes the Luckin Coffee accounting fraud
with details of responsible parties, events, and financial
misconduct in the case of Securities and Exchange
Commission vs Luckin Coffee. This case was settled in
December 2020.
PARTIES
The core parties in this case include:
Luckin Coffee Inc. (Luckin)
Luckin is a beverage retailer in China selling mainly coffee and
tea. After opening its first Beijing and Shanghai stores in
January 2018, Luckin rapidly expanded by establishing 4,507
stores in the following two years. Luckin claimed it served
more than 40 million customers as of the end of 2019 ,
becoming the largest coffee retailer in China, overshadowing
its rival, Starbucks, in the region. In a bid to increase market
share, if consumers purchased Luckin products with coupons
via the company’s app, Luckin offered them sizeable discounts
or free products. Specifically, Luckin provided two methods for
consumers to buy goods, either (1) through a digital payment
platform operated by a third-party, such as WeChat Pay or
Alipay, or (2) by redeeming coupons through Luckin’s app.
Customers could buy these coupons in advance through
Luckin’s app by transferring money from WeChat Pay or
Alipay. According to Luckin, the revenue from the sale of
coupons was calculated based on the number of redemptions,
instead of the actual number of coupons sold.
[1]
[2]
[3]
The US Securities and Exchange Commission charged Luckin
with fabricating untrue statements from April 2019 to January
2020 regarding revenue, expenses, and net loss so as to
deceive investors about Luckin’s financial performance. In
December 2020, China-based coffee retailer Luckin agreed to
pay USD180 million to settle charges of fraud and accounting
irregularities.
[4]
Securities and Exchange Commission (SEC)
SEC is a federal government regulatory agency that oversees
securities markets to ensure accountability, transparency, and
fair financial transactions. It aims to protect investors from
financial irregularities and monitor the listed company’s
actions in the US. The SEC has the authority to bring a civil
action against an individual or company and impose civil
penalties.
Luckin’s Senior Management
The senior management of Luckin has a fiduciary duty to
certify and ensure financial statements are accurate. Former
Chairman Charles Zhenyao Lu, former CEO Jenny Zhiya Qian,
and former COO Jian Liu failed to maintain the strong internal
controls necessary to ensure reliable financial statements and
the accuracy of transactions.
Luckin’s Board of Directors
The board of directors are responsible for overseeing Luckin’s
management and spotting unethical practices. Luckin’s former
COO, Jian Liu, resigned in April 2020, admitting he had
overstated the company’s revenue. A number of directors and
the chairman were replaced after a general meeting was held
in July 2020.
Muddy Waters LLC (Muddy Waters)
Muddy Waters is an investment research firm based in the US.
It conducts research about financial fraud. Seven Pillars
Institute is of the view that “Muddy Waters’s combination of
short selling and equity research is a clever business model,
necessary to satisfy the market’s need for research analysts or
firms independent of sell-side companies.”
[5]
Short-seller Muddy Waters Research received an anonymous
report, together with supporting evidence in January 2020,
alleging the fraudulent conduct of Luckin. Muddy Waters
publicly posted this report to its Twitter account and did not
indicate how it obtained the anonymous report.
[6]
[7]
The report alleged that Luckin fabricated performance
through inflated revenue, coupon sales, and redemptions. The
report questioned Luckin’s practices and revealed the falsified
sales volume. The report showed that Luckin marked up its
sales volume by 69% in the third quarter of 2019 and 88% in
the fourth quarter of the same year. Further, the report
raised questions about the inflated revenue, false accounting
practices, and abuse of senior management positions. The
report also questioned the extraordinary market share of
coffee sales in China that Luckin claimed, given most caffeine
intake in China comes from tea, as in most countries in
Asia. Muddy Waters said it decided the share price of Luckin
would drop and had sold short Luckin’s shares after releasing
the report to the public.
[8]
[9]
[10]
Figure 1: The Market Share of Coffee Sales in China as Claimed
by Luckin
(Source: Luckin Coffee )
[11]
Audit Committee
The audit committee is a board committee of members
responsible for monitoring external auditors and making sure
the internal controls to prevent false accounting are robust.
The members of Luckin’s former audit committees, Tianruo Pu
and Sean Shao, resigned from the board in June 2020. In
Luckin’s case, the audit committees failed to conduct due
diligence and question the fabricated transactions. Instead,
[12]
the committee delegated its responsibility to management.
This raises the question of the extent to which independent
directors can freely advise, given they are paid by
management. Directors also rely on management to provide
accounting information and financial performance data.
Internal Auditors
Internal auditors are responsible for overseeing accounting
accuracy and compliance procedures. In Luckin’s case, there
was a business operations database that showed the actual
transactions of sales, redemptions, and orders. However,
another database comprising the fabricated transactions was
used to prepare the false financial statements. The financial
department only had access to the fabricated database and
was unable to verify the accuracy of the transactions. Internal
auditors not only failed to spot the abnormal transactions,
they also cooperated in fabricating the company’s
performance in the financial statements.
[13]
[14]
[15]
External Auditor
Ernst & Young Hua Ming LLP (EY) was the external auditor for
Luckin. EY made two public statements about Luckin. The first
made in April 2020, stated EY had found the fabricated
revenue and expenses from 2019 and reported it to the
board. The second statement, made in July 2020, provided
further details and stated it recognized irregularities in
January 2020 and immediately raised red flags. EY denied any
responsibility in the scandal. EY audited Luckin’s 2017 and
2018 financial reports, which were part of the
company’s IPO prospectus, but did not audit the 2019
financial statements. However, EY wrote a private letter to a
number of investment banks stating it did not have an issue
[16]
with the financial performance of Luckin in the first three
quarters of 2019. This letter was issued before the 2019
financial statements were audited.
[17]
EVENTS
IPO Launched
In May 2019, within 18 months of Luckin’s grand opening, the
company launched its IPO of American Depositary Shares in
the United States and listed on Nasdaq. The first United States
listed coffee retailer based in China, Luckin made roughly
USD600 million from investors. Operating 2,370 stores in
China in March 2019, the company claimed its “disruptive
model has fulfilled the large unmet demand for coffee and
driven its mass-market consumption in China… allowing us to
achieve significant scale and growth” . Luckin also reported its
revenue reached USD71.3 million in the first quarter of 2019 –
more than half of the total revenue for the whole of 2018.
Luckin highlighted its rapid growth in the first quarter of 2019,
pointing to quantity of products sold, cumulative consumers,
number of stores, and revenue. The company’s
estimated market value increased from USD1 million in July
2018 to USD3.9 billion in May 2019. The public report of
Luckin‘s rapid growth pushed the value of the company to
USD5 billion. The company was delisted from the Nasdaq on
29 June, 2020.
[18]
Figure 2: Rise and Fall of Luckin Coffee from January 2020 to
May 2020
(Source: Luckin’s announcements, Media reports and Caixin )
[19]
Luckin’s Fabricated Sales
It was later revealed Luckin had been using fabricated coupon
sales to inflate its revenue from the beginning of April 2019,
with employees being involved in three types of fraudulent
schemes. Deals were done by fabricating coupons to three
groups of consumers: individual customers, corporate
customers, and sales to third-party shell companies –
intermediary agents that would resell coupons to individual
customers. Indeed, some of Luckin’s management and
employees were aware of the schemes and the false
accounting.
[20]
First Fraudulent Scheme
In April 2019, Luckin began fabricating the number of coupons
sold and redeemed by individual customers. Some of Luckin’s
employees, their family members, and other related
companies transferred money from private bank accounts to
their WeChat Pay or Alipay accounts in order to purchase
coupons on Luckin’s app. They then redeemed the coupons
and created fake orders, thereby intentionally and dishonestly
increasing sales figures. More than USD1 million of sales was
fabricated in the first scheme. It is uncertain whether Luckin
recycled the money back to the employees so they could
purchase more coupons. However, Luckin recognized the
fabricated revenue.
[21]
[22]
Second Fraudulent Scheme
In May 2019, Luckin employees began selling coupons to fake
corporate customers, who were, in fact, related to Luckin
employees. The corporate customers would transfer money
from their corporate WeChat Pay or Alipay accounts to
Luckin’s app to buy coupons. Similar to the first scheme, these
fake coupon redemption orders artificially enhanced sales
performance. Roughly USD10 million of sales were fabricated
in the second scheme. However, it is uncertain whether Luckin
recycled the money back to the employees.
Third Fraudulent Scheme
Beginning in May 2019, the third scheme saw Luckin
employees fabricate the number of coupons sold to
third-party shell companies. These shell companies would
then resell the coupons to individual customers. It is likely
these individual customers were also employees as they
neither placed real orders nor redeemed the coupons. Some
of Luckin’s employees or their related companies established
and controlled these shell companies, which transferred funds
to Luckin. Employees would then change the name of the
[23]
sender from the funding company to the shell company in
Luckin’s bank statements. Luckin’s employees would redeem
coupons and make fake orders, fabricating coupon sales and
revenue. This made up the largest portion of fabricated
revenue, approximately 90% of the total USD311 million.
Some Luckin employees switched the source data from the
actual business operations database to the fabricated
database. Source data includes reports necessary for
preparing financial statements and bookkeeping. Luckin’s
finance department could only access the fabricated database
and thus failed to notice the abnormal transactions.
Fabricated Expenses and Returned Funds
Luckin returned funds to the funding companies in the third
scheme through bank transfers and fabricated expenditure.
Business-related expenses, as set out in the financial
statements, showed that there were payments to vendors,
including suppliers. However, these vendors did not provide
any services or products to Luckin in return. Luckin also
fabricated costs so that they were consistent with the
overstated revenue. In 2019, the total fabricated expenses
and costs were around USD196 million.
Figure 3: An Example of Fabricated Expenses and Returned
Funds
(Source: The Wall Street Journal )
[24]
Earnings in the second quarter of 2019: Luckin substantially
overstated its revenue by 27%, expenses by 9%, and net loss
was understated by 15%.
[25]
Earnings in the third quarter of 2019: Luckin’s revenue and
expenses were overstated by 45% and 24%, respectively, and
its net loss was understated by 34%. Further, Luckin’s share
price increased 60% from the IPO price.
[26]
Fabricated sales and expenses in the fourth quarter of
2019: Luckin continuously fabricated coupon sales, and
overstated revenue and expenses. Luckin’s share price
increased 100% from the IPO price.
[27]
Equity offering and bond issuance in January 2020: Luckin
obtained an equity offering and convertible bond offering of
about USD418 million and USD446.7 million, respectively.
These offerings were based on the fabricated financial
performance as mentioned above. Within eight months of
Luckin’s IPO listing, the company’s stock price increased
200%.
[28]
The Accounting Scandal and Fraud at Luckin
Coffee
Luckin made false statements and fabricated its financial
performance to lure in investors. Luckin failed to disclose
accurate revenue and expenses, and also obtained money
through false bank statements. Moreover, Luckin failed to
maintain adequate internal accounting controls or keep
accurate financial records. The company knew its financial
statement and records were misleading and deceptive. Luckin
conspired with funding companies, vendors, and third-party
shell companies to fabricate expenses and costs.
OUTCOME
The US Securities and Exchange Commission, the Chinese
securities regulator, and China’s State Administration for
Market Regulation, opened an investigation into Luckin’s
conduct. It was found by the US SEC that Luckin’s misconduct
constituted fraud.
After which, on 2 April 2020, Luckin’s share sank 81%. Trade in
Luckin shares was initially suspended, but it was resumed on
20 May 2020. Luckin also conducted an internal investigation
and in April 2020 announced that more than USD300 million
was fabricated in 2019, and the relevant public financial
reports should be ignored. Twelve employees who worked
with the CEO and COO involved in the three schemes were
fired, and by July 2020, Luckin’s CEO, Jenny Zhiya Qian, was
fired. Furthermore, evidence showed the companies which
purchased the coupons had links to the chairman (see Figure
3). The chairman was removed in July 2020.
[29]
[30]
The SEC charged Luckin with fabricating untrue statements
from April 2019 to January 2020 regarding revenue, expenses,
and net loss so as to deceive investors about Luckin’s financial
performance. The SEC finalized the investigation and
announced a penalty against Luckin on 16 December 2020.
This resulted in Luckin agreeing to a settlement, including
permanent injunctions and paying USD180 million in
monetary penalties. Luckin has not admitted to or denied the
allegations.
[31]
[32]
ANALYSIS OF ETHICAL ISSUES
Luckin’s ethical failure was the management intentionally
misrepresented the company and produced false accounting
documents to mislead investors for their own advantage.
Ethics analysis in this case includes all levels of a company,
including senior management, the board of directors, audit
committee, internal auditors, and external auditors, while
discussions are related to conflicts of interest, dishonesty,
abusing positions of power, and failure to fulfil fiduciary
duties.
Fraud is usually due to multiple parties’ misconduct, including
senior management, frontline staff, internal auditors, and
external auditors. However, management has the duty to
ensure the maintenance of ethical standards in a company. In
Luckin’s case, several moral agents failed to fulfil their moral
responsibilities, which led to the accounting scandal and
fraud.
Three core elements led to fraud in Luckin’s case: (1) internal
pressure to reach unrealistic sales targets through coupon
sales and redemption, (2) reckless company management
creating the opportunity for fraud, and (3) rationalising it was
acceptable to fabricate financial statements to meet targets.
Responsibility for Ethical Failures
1. Lack of Integrity and Commutative Justice
Luckin’s Senior Management
Senior managers lacked the incentive to maintain their ethics
and fiduciary duties with non-investors, including employees
and vendors. There is evidence showing the chairman
instructed his employee to fabricate transactions. Further,
management set unrealistic targets for short-term sales
performance, creating unnecessary pressure on employees
and preventing the company’s long-term success.
[33]
Integrity is an essential element of financial ethics and its lack
affects the trust between investors and senior management.
Investors expect management to behave honestly, which
includes full and transparent disclosure of financial
statements. However, the senior management in Luckin’s case
intentionally encouraged false accounting to deceive auditors
and prepared false financial statements to mislead investors.
In addition, investors expected that Luckin would provide full
and accurate public financial statements, which the company
failed to do.
Commutative justice is a form of justice relevant in finance
and business transactions. Commutative justice relates to
fairness in the exchange of goods or services. In other words,
justice in a market exchange related to a contractual
relationship based on integrity, fairness, and accuracy. To fulfil
a contractual obligation, the seller has the responsibility to
disclose information thoroughly and accurately. The seller and
buyer negotiate the market price based on the information
consistent with the actual value of the goods or services. In
Luckin’s case, the share price increased because of overstated
revenue and expenses. Thus, the company deceived investors
and violated commutative justice.
2. Failure to spot unethical practices
Luckin’s Board of Directors
Luckin’s directors failed to monitor, supervise management,
and establish an ethical culture. There is doubt regarding
whether the directors questioned Luckin’s aggressive plan or
its rapid growth in the market share of coffee in China.
Luckin’s directors failed to ask any questions or spot the
unethical practices. Though Muddy Waters Research released
its report in February 2020, the directors kept silent and did
not raise any red flags as they should have. This could be a
result of prioritizing short-term profits and overlooking
behavioural pitfalls. Board culture such as dominant
leadership, groupthink, and confirmation bias can increase
the chance of accounting scandals. A more effective code of
[34]
ethics can encourage directors to identify bad conduct earlier
and mitigate the risk of fraud. It is therefore necessary to
establish a strong sense of honesty and openness throughout
the company, from the directors to the frontline staff, so staff
feel secure enough to report any misconduct.
3. Violating Code of Ethics
Audit Committee
An audit committee has a duty to apply the code of ethics and
ensure the company acts honestly and not be swayed by the
share price and its relationship with management. However,
in this case, the audit committee kept silent and failed to
notify the board of potential ethics infringement.
Internal Auditors
Integrity, objectivity, and competency are the core elements of
the code of ethics among internal auditors. Internal auditors
are the first defensive line in the prevention of financial
misstatement. Internal auditors need to be trustworthy, as
trust is fundamental to their profession. Furthermore, without
being influenced by a third-party or their interests, internal
auditors must have high standards of objectivity when
collecting and evaluating information and making balanced
judgements. They should apply their knowledge, skills, and
experience to ensure the accuracy of the system. However,
Luckin’s internal auditors cooperated with the fabricated
transactions and violated their code of ethics.
4. Conflicts of Interest
External Auditor
EY wrote a private letter to a number of investment banks
stating it did not have an issue with the financial performance
of Luckin in the first three quarters of 2019. This letter was
issued before the 2019 financial statements were audited. EY’s
letter raised a few questions. First, EY’s letter might represent
a guarantee there was no problem with Luckin’s finances.
However, the purpose of due diligence is to express the
auditor’s opinion of reasonable assurance. It is not a
guarantee that financial performance is free of error. It might
appear the EY letter was deceiving the investment banks into
believing there was no issue with Luckin. Although EY did not
audit Luckin’s 2019 financial statement, EY is not necessarily
absolved of responsibility.
[35]
[36]
According to EY’s two statements, the auditor stated it
identified the inflated financial results and reported it to the
board. They also raised red flags regarding Luckin’s
misstatement in early 2020. It is therefore likely that EY
noticed the fabricated statement and discovered the fraud. EY
chose to quietly withdraw as an auditor from the client,
possibly due to a conflict of interestbetween the firm and its
own investors, and did not report the potential fraud to
regulators. A conflict of interest is something which
“jeopardizes an individual’s ability to act ethically by interfering
with his or her capacity to exercise good judgment. This
interference may lead to wilful neglect of the individual’s
professional or public obligation”. An auditor has an
obligation to reasonable assure the accuracy of the financial
performance of its client. As a commercial firm, EY’s revenue
depends on its relationships with its clients, which may create
a conflict of interest – the client’s interests override public
interest. EY failed to act ethically by not reporting the potential
fraud to the regulators, and instead serving the interests of
[37]
[38]
the client. Instead, EY issued a letter to the investment banks,
stating that Luckin had no financial irregularities. As a
professional accounting firm, EY has a responsibility to
consider public interest and a duty of transparency and
integrity. To avoid structural conflict of interest and improve
regulatory oversight, separating audit practices from other
business units might encourage auditors to act
independently.
Conclusion
Several parties are responsible for the accounting scandal and
fraud at Luckin. Luckin should have established and applied a
more robust code of ethics throughout the company, from
senior management to frontline staff, in order to detect fraud
at an earlier stage and to remain consistent with commutative
justice. External auditors should have been more proactive in
raising red flags regarding the company’s misconduct, as well
as avoided guaranteeing financial performance to other
parties until the firm had conducted its due diligence.
Regulatory agencies also play a role in preventing improper
transactions by implementing and enforcing laws. There are
monitoring, investigation, and moral obligations between
regulators and publicly listed companies. The regulators in
China and the US should have ensured that Luckin fulfilled its
duty of integrity and transparency before listing. A more
comprehensive and rigorous system may have brought
Luckin’s fraud to light earlier.
Looking ahead, structural changes could reduce the risk of
fraud. First, increasing regulators’ powers of enforcement
could expedite the investigation process and minimise the
negative impact of fraud. Second, providing more fraud
detection training for auditors would increase their skills and
ability to spot improper transactions. Third, increasing
transparency and stringent vetting of the internal auditing
system would help auditors make balanced judgements from
all perspectives. Finally, as historian A. J. P. Taylor once said,
“Nothing is inevitable until it happens”. Hopefully, the Luckin
case raises awareness about the importance of multilevel
cooperation on a company’s financial ethics and moral
culture.
Luckin Coffee, Press Release and Statements, “Luckin Coffee
announces smart unmanned retail strategy, bringing Luckin
closer to customers” 7 January 2020
< https://investor.luckincoffee.com/news-releases/news-releas
e-details/luckin-coffee-announces-smart-unmanned-retail-stra
tegy-bringing>.
[1]
Case Securities and Exchange Commission vs Luckin Coffee,
Inc., 1:20-cv-10631, United States District Court Southern
District of New York, 16 December 2020.
[2]
[3]
Ibid.
US Securities and Exchange Commission, “Luckin Coffee
Agrees to Pay $180 Million Penalty to Settle Accounting Fraud
Charges”, 2020-319, 16 December 2020, Press Release
< https://www.sec.gov/news/press-release/2020-319>
[4]
Winky T. Yang, “Profit and Ethics in Short Selling: The Case of
Muddy Waters”, 6 January 2015
< https://sevenpillarsinstitute.org/profit-ethics-short-selling-ca
se-muddy-waters/>
[5]
Ben Coley, “Luckin Coffee Faces Fraud Allegations from
Anonymous Report”, QSR, January 2020
[6]
< https://www.qsrmagazine.com/fast-food/luckin-coffee-facesfraud-allegations-anonymous-report>.
Ben Coley, “Luckin Coffee Faces Fraud Allegations from
Anonymous Report” January 2020
< https://www.qsrmagazine.com/fast-food/luckin-coffee-facesfraud-allegations-anonymous-report>
[7]
Anonymous Report, “Luckin Coffee: Fraud + Fundamentally
Broken Business”, 2020
<https://drive.google.com/file/d/1LKOYMpXVo1ssbWQx8j4G3strg6mpQ7F/view>.
[8]
Anonymous Report, “Luckin Coffee: Fraud + Fundamentally
Broken Business”, 2020
<https://drive.google.com/file/d/1LKOYMpXVo1ssbWQx8j4G3strg6mpQ7F/view>.
[9]
Saqib Iqbal Ahmed, “Luckin Coffee share price may nearly
double to $60 on US exchanges: hedge fund Citron Capital,
Reuters, 5 February 2020
< https://www.reuters.com/article/us-luckin-coffee-stock-citro
n-idUSKBN1ZY2EK>
[10]
33,000,000 Amercian Depositary Shares, Luckin Coffee Inc.
“Representing 264,000,000 Class A Ordinary Shares
<https://investor.luckincoffee.com/node/6391/html>
[11]
GlobeNewswire, “Luckin Coffee Received Notification from
Mr. Tianruo Pu of his resignation as an Independent Director”,
19 June 2020
< https://www.globenewswire.com/news-release/2020/06/19/
2050625/0/en/Luckin-Coffee-Received-Notification-from-Mr-Ti
anruo-Pu-of-his-Resignation-as-an-Independent-Director.html
>.
[12]
Russell Flannery, “Responsibility for Luckin Coffee’s
Accounting Debacle Is Far And Wide”, 3 April 2020,
<https://www.forbes.com/sites/russellflannery/2020/04/03/res
ponsibility-for-luckin-coffees-accounting-debacle-is-far-and-wi
de/?sh=a7be566104e4>
[13]
Case Securities and Exchange Commission vs Luckin Coffee,
Inc., 1:20-cv-10631, United States District Court Southern
District of New York, 16 December 2020, Paragraph 29-30.
[14]
Case Securities and Exchange Commission vs Luckin Coffee,
Inc., 1:20-cv-10631, United States District Court Southern
District of New York, 16 December 2020, Paragraph 30.
[15]
Jing Yang, “Ernst & Young Says It Isn’t Responsible for Luckin
Coffee’s Accounting Miscouduct”, Wall Street Journal, 17 July
2020
<http://www.chinabevnews.com/2020/07/ernst-young-says-it-i
snt-responsible.html>.
[16]
[17]
Ibid.
Nasdaq, “Luckin Coffee Inc. (LK)”
< https://www.nasdaq.com/market-activity/ipos/overview?deal
Id=1083391-89499>
[18]
Yang Ge, Shen Xinyue, Wei yiyang and Qu Yunxu, “Luckin
Explained: How Did Scandal-Plagued Coffee Highflyer Get Into
Such Hot Water?” 20 May 2020, Caixin
< https://www.caixinglobal.com/2020-05-20/luckin-explained-h
ow-did-scandal-plagued-coffee-highflyer-get-into-such-hot-wat
er-101556560.html>
[19]
Case Securities and Exchange Commission vs Luckin Coffee,
Inc., 1:20-cv-10631, United States District Court Southern
District of New York, 16 December 2020, Paragraphs 21- 30.
[20]
Case Securities and Exchange Commission vs Luckin Coffee,
Inc., 1:20-cv-10631, United States District Court Southern
District of New York, 16 December 2020.
[21]
Case Securities and Exchange Commission vs Luckin Coffee,
Inc., 1:20-cv-10631, United States District Court Southern
District of New York, 16 December 2020, Paragraphs 21- 22.
[22]
Case Securities and Exchange Commission vs Luckin Coffee,
Inc., 1:20-cv-10631, United States District Court Southern
District of New York, 16 December 2020, Paragraph 28.
[23]
Jian Yang, “Behind the Fall of China’s Luckin Coffee: a
Network of Fake Buyers and a Fictitious Employee”, 28 May
2020
< https://www.wsj.com/articles/behind-the-fall-of-chinas-lucki
n-coffee-a-network-of-fake-buyers-and-a-fictitious-employee-1
1590682336>.
[24]
Case Securities and Exchange Commission vs Luckin Coffee,
Inc., 1:20-cv-10631, United States District Court Southern
District of New York, 16 December 2020.
[25]
[26]
Ibid.
[27]
Ibid.
[28]
Ibid.
Luckin Coffee, “Luckin Announces the Substantial
Completion of the Internal Investigation”, 1 July 2020
< https://investor.luckincoffee.com/news-releases/news-releas
e-details/luckin-announces-substantial-completion-internal-in
vestigation>
[29]
Ben Coley, “Luckin Coffee Agrees to Pay $180 Million Fine for
Fraud Scandal”, QSR, 17 December 2020
<https://www.qsrmagazine.com/finance/luckin-coffee-agreespay-180-million-fine-fraud-scandal>.
[30]
US Securities and Exchange Commission, “Luckin Coffee
Agrees to Pay $180 Million Penalty to Settle Accounting Fraud
Charges”, 2020-319, 16 December 2020, Press Release
< https://www.sec.gov/news/press-release/2020-319>
[31]
[32]
Ibid.
Anna Vod, “Chariman of Luckin Coffee Allegedly Fraud”
CapitalWatch, 9 Jun 2020
< https://www.capitalwatch.com/article-5769-1.html>.
[33]
Mak Yuen Teen, “What the Wirecard and Luckin Coffee
scandals can teach Asia’s boards”, Nikkei Asia, 21 August 2020
<https://asia.nikkei.com/Opinion/What-the-Wirecard-and-Luck
in-Coffee-scandals-can-teach-Asia-s-boards>.
[34]
[35]
Ibid.
Drew Bernstein, “Who is responsible for preventing frauds?”
In Forensic Accounting, MBP,
< https://crm.marcumbp.com/china-accounting-insights/who-i
s-responsible-for-preventing-frauds>.
[36]
Jing Yang, “Ernst & Young Says It Isn’t Responsible for Luckin
Coffee’s Accounting Misconduct” 17 July 2020
< http://www.chinabevnews.com/2020/07/ernst-young-says-itisnt-responsible.html>
[37]
Seven Pillars Institute, “Conflict of Interest” 26 August 2017
< https://sevenpillarsinstitute.org/glossary/conflict-of-interest/
>
[38]