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Nasdaq exchange 's listing qualifications staff said Tuesday that Luckin Coffee shares should be delisted, according to a regulatory filing. - The Chinese coffee chain is under investigation by both the US and China after it announced in April that employees fabricated as much as 2.2 billion yuan ($310 million) in sales last year.
Nasdaq cited "public interest concerns" for itsdelisting recommendation along with past failures to disclose key information.- Luckin said it plans to request a hearing before an exchange panel.
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The Nasdaq exchange's listing qualifications staff told Luckin Coffee that its shares should be delisted, according to a Tuesday regulatory filing.
The Chinese coffee chain has fallen under strict regulatory scrutiny in recent weeks after its April 2 discovery that employees including its chief operating officer fabricated as much as 2.2 billion yuan ($310 million) in sales. The falsifications occurred from the second quarter of 2019 to the fourth quarter, Luckin said.
The exchange's staff cited "public interest concerns" surrounding the cooked books, as well as past failure to disclose critical information, for its delisting recommendation.
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Luckin aims to request a hearing before an exchange panel and will remain listed on Nasdaq pending the hearing's outcome, according to the filing. Hearings typically take place 30 to 45 days after a request is made.
The Luckin filing comes nearly one week after President Donald Trump said the US is "looking at" Chinese firms that trade on US exchanges but don't follow accounting guidelines. The president added that such policy could backfire and drive Chinese companies to go public in London or Hong Kong.
The Wall Street Journal reported on April 29 that the Securities and Exchange Commission is investigating the coffee chain over its sales fabrications. The probe will serve as a litmus test for how the agency will cooperate with Chinese regulators, as the country recently introduced new laws that limit compliance with overseas authorities.
News of Luckin's fabricated sales drove the stock down as much as 80% on April 2. Trading of the Starbucks competitor's stock was frozen on April 7, and shares have sat at $4.39 since.
Luckin stock surged as high as $5o in January before plummeting through the coronavirus sell-off. The company made its US trading debut in May 2019.
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