The Nasdaq Stock Market notified the Chinese cafe chain Luckin Coffee that it plans to delist it from the U.S. stock exchange, the company said Tuesday.
The Listing Qualifications Staff cited two reasons in their written notice for the decision to delist, the company said in a regulatory filing, including “public interest concerns” related to up to $310 million in sales fabricated by Luckin’s former chief operating officer, as well as the company’s “past failure to publicly disclose material information.”
The sales fraud was disclosed in April, causing shares to drop 83 percent.
Luckin said it will request a hearing before a Nasdaq panel to discuss the decision, until which the company will remain listed on the exchange. The coffee company, a rival to Starbucks in China, was founded nearly three years ago and was first listed on Nasdaq in May of last year. Since its founding, the company has established 4,500 coffee shops in China.
The exchange’s decision comes as criticism of China heightens in the U.S. in the wake of the coronavirus pandemic, which began in the Chinese city of Wuhan. Lawmakers last month asked the Trump administration to reroute the taxpayer dollars of federal employees in a government retirement program away from Chinese companies they argue threaten U.S. security.
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