Please ensure Javascript is enabled for purposes of website accessibility

Luckin Coffee Fires CEO and COO

By Eric Volkman - May 12, 2020 at 8:30PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The move comes not long after a major accounting scandal broke at the company.

In what can be seen as an inevitable move, Luckin Coffee (LKNC.Y -2.91%) fired the two executives allegedly connected to a recent scandal. The company announced Tuesday that it relieved CEO Jenny Zhiya Qian and COO Jian Liu of their positions. It also demanded, and received, their resignations as members of the board of directors.

Last month, it came to light that Luckin Coffee exaggerated its sales figures for last April through September by 2.2 billion yuan ($310 million). The company launched an internal investigation into the matter and suspended Liu. It has since suspended or placed on leave another six employees who it says "were involved in or had the knowledge of the fabricated transactions." The positions and identities of those people have not been revealed.

Spilled coffee on a rug.

Image source: Getty Images.

Luckin Coffee's internal investigation is not the only probe into the matter. Also in April, according to media reports, the U.S. Securities and Exchange Commission (SEC) launched its own investigation. This followed a raid on the China-based company's headquarters in the city of Xiamen by a national regulator, the State Administration for Market Regulation. 

In early April, the Nasdaq halted trading of Luckin Coffee's U.S.-listed shares. That freeze remains in place.

Luckin Coffee has already replaced Qian as CEO. Jinyi Guo, a board member and senior vice president at the company, now occupies that job on a provisional basis. The two vacant board seats have been filled; Luckin Coffee named company insiders to those positions. 

In the press release announcing its moves, Luckin Coffee asserted that it "has been cooperating with and responding to inquiries from regulatory agencies in both the United States and China" and added: "The company will continue to cooperate with the Internal Investigation and focus on growing its business."

 

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Luckin Coffee Inc. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Luckin Coffee Inc. Stock Quote
Luckin Coffee Inc.
LKNC.Y
$14.10 (-2.91%) $0.42

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
397%
 
S&P 500 Returns
128%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/19/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.