On April 27, 2020 Minerva Analytics reported that “US authorities are placing greater scrutiny on Chinese companies and other emerging markets listed in the US following the fallout from the Luckin Coffee fraud scandal.”
A recent success story among investors, having raced to a Nasdaq listing within 18 months of its foundation, and challenging coffee giant Starbucks in the Chinese market, Luckin Coffee’s reputation now lies in tatters.
This month, allegations of a $300m fraud linked to a former board member were followed by reports that the company had suspended several staffers and launched an internal investigation.
However, Luckin’s problems did not stop there: the US Securities and Exchange Commission (SEC) has now stepped in and issued a lengthy statement on the risks of investing in emerging market companies.
The SEC, and US investors in general, have had a difficult relationship with Chinese companies ever since the Sino-Forest scandal in 2011 when allegations of fraudulent accounting surfaced.”
You can read the article on the Minverva Analytics internet site.