Luckin Coffee resumed trading on Nasdaq today after announcing that on May 15, 2020, it had received a written notice from the stock market’s Listing Qualifications Staff that its securities were determined to be delisted from Nasdaq.
The Listing Qualifications Staff gave two reasons for the decision – “public interest concerns as raised by the fabricated transactions disclosed by the Company in a Form 6-K on April 2, 2020” and “the Company’s past failure to publicly disclose material information, citing a business model through which the previously disclosed fabricated transactions were executed.”
The embattled coffee company plans to request a hearing before the Nasdaq Hearings Panel to reverse the decision which is typically scheduled to occur 30 to 45 days after the date of the hearing request. Meanwhile, Luckin will remain listed on Nasdaq.
The news come in the wake of Nasdaq proposing more stringent listing standards that could potentially limit the ability of companies from emerging markets, including China to list or remain listed on the exchange.
Lu Zhengyao, chairman of Luckin Coffee, issued a statement apologizing to investors for the company’s misdeed and at the same time expressing his regret concerning Nasdaq asking the company to delist without waiting for the final investigation results.
He also emphasized his firm belief in Luckin’s business model, noting that the company’s annual revenue has continued to grow. “My style may be too aggressive, and the company might be running too fast, which causes a lot of problems, but I am by no means using concepts to deceive investors,” he said.
Luckin went public on Nasdaq in May 2019 however trading in its stock was halted in April after it was revealed that the company fabricated $310 million in transactions. The company has since been under scrutiny by Chinese regulators.