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Luckin Coffee Share Price Inflation Class Action Settlement Overview:
- Who: Luckin Coffee is settling class action claims with its shareholders.
- What: The coffee chain, a would-be challenger to Starbucks, is paying $175 million to settle claims it falsely inflated its share price by making up revenue.
- Where: The class action settlement covers Luckin Coffee investors nationwide.
Luckin Coffee, a Chinese coffee chain that took on Starbucks in the United States, has agreed to pay $175 million to its shareholders to settle class action claims it fraudulently inflated its share price.
An order approving the class action settlement was filed in New York federal court Oct. 25. In it, lawyers for the plaintiffs are seeking 25 percent of the $175 million settlement fund.
Investors are expected to get 43 cents for each American Depository Share of Luckin Coffee Inc. bought between May 17, 2019 and July 15, 2020, the order says.
Investors first filed the class action against Luckin Coffee in 2020 after a short-selling firm released an anonymous report accusing the company of fabricating financial performance metrics in 2019.
Luckin Coffee Stock Tanks After Co Admits Lies, Class Action Lawsuit Follows
The company admitted to faking about $300 million in sales and told investors not to rely on nine months’ worth of 2019’s financial statements and earning releases. After the news broke, Luckin Coffee’s share price fell more than 75 percent.
In April 2020, Luckin Coffee announced it had suspended Chief Operating Officer Jian Liu after finding that he and a number of his subordinates “had engaged in certain misconduct, including fabricating certain transactions.”
In May 2020, Luckin fired Liu and CEO Jenny Zhiya Qian, and later emails were released showing Chairman Charles Zhengyao Lu gave direct orders to commit accounting fraud.
Luckin Coffee was delisted from the Nasdaq, and is now going through liquidation proceedings in the Cayman Islands, and has a related filing for protection under the U.S. Bankruptcy Code.
The would-be Starbucks challenger has denied wrongdoing.
According to the Oct. 25 order, a hearing is scheduled for Jan. 31, 2022, to consider final approval. The settlement also requires approval by a Cayman Islands court.
The lead plaintiffs in the class action included several pension funds.
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The plaintiffs are represented by Salvatore J. Graziano of Bernstein Litowitz Berger & Grossmann LLP and Sharan Nirmul of Kessler Topaz Meltzer & Check, LLP.
The Luckin Coffee Class Action Lawsuit is In Re Luckin Coffee Inc. Securities Litigation, Case No. 1:20-cv-01293-JPC in the U.S. District Court for the Southern District of New York.
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3 thoughts onLuckin Coffee To Pay $175M to Shareholders, Settling Share Price Inflation Class Action
When will investors hear from the attorneys (who get more than the investors) latest news and when the funds will be distributed??
Will I ever receive a check on Luckin Coffee?????????
I got screwed in the stock market when I purchased their stock. I hope to receive more then 40 something cents a share!