HONG KONG/NEW YORK (Reuters) - Luckin Coffee Inc (LK.O) said on Tuesday that Nasdaq Inc (NDAQ.O) has notified it of plans to delist it from the U.S. stock exchange, a month after the Chinese coffee chain disclosed that some employees fabricated sales accounts.
Nasdaq has renewed its focus on auditing standards. This week it tightened listings rules, hoping to curb initial public offerings (IPOs) of Chinese companies closely held by insiders and opaque about accounting, Reuters reported on Monday.
Luckin said in early April that as much as 2.2 billion yuan ($310 million) in sales last year were fabricated by its chief operating officer Jian Liu and other staff, who had been suspended while the company carried out its investigation.
The falsified numbers equate to about 40% of Luckin’s annual sales projected by analysts, according to Refinitiv IBES data.
In its delisting notice, Nasdaq cited public interest concerns raised by the fabricated transactions and Luckin’s failure to disclose material information, the company said, confirming an earlier Reuters report.
Luckin plans to challenge the move before a Nasdaq hearing panel, and will remain listed until the outcome, most likely within two months, the company added.
Founded in June 2017, Luckin, a rival to Starbucks (SBUX.O) in China, had one of the most successful U.S. IPOs by a Chinese company last year.
Luckin disclosed on May 12 that it had fired its chief executive officer, Jenny Zhiya Qian, who had led the company since November 2017, and Liu, who became COO in May 2018.
Shares of the Xiamen-headquartered company slumped more than 80% on April 2, the day the probe was revealed. Trading was halted on April 7. Pending an outcome on the delisting, Nasdaq said it would allow the shares to resume trading on May 20.
Luckin has said it has been cooperating with and responding to inquiries from regulators in the United States and China.
Reporting by Julie Zhu in Hong Kong and Echo Wang in New York; Editing by Chizu Nomiyama and Will Dunham