Credit Suisse Coffee Supervisor and IPO on May 17,2019 at the opening bell New York NASDAQ, USA
China-listed coffee chain, once hailed as the world's fastest-growing, has lost 90 per cent of its stock after it was notified by an American stock exchange of fraud. Chinese listed companies with similar frauds have attracted the attention of U.S. regulatory authorities and have proposed stricter regulatory measures.
President Trump is very strong in demanding that Chinese listed companies act according to the US parliament system, but he is afraid to scare them away. And in the context of the growing confrontation between the US and China relationship, many Chinese listed companies in the United States are already preparing to retreat, which experts call an era of "all-around decoupling ".
Lucky coffee was told to decry
Nasdaq (Nasdaq Inc.) said on tuesday that Luckin Coffee, which has been notified of delisting and is currently suspended, will resume trading on wednesday (5/20). market observation (MarketWatch) reported that the company was suspended from april 7 and its share price remained at $4.39. The Unit has a maximum of over $50.
On may 15th ruisuke received a notice of delisting from nasdaq, troubled by the fraud scandal, which said there were two reasons. First, the company's false deal raised concerns about the public interest. Second, the company has failed to disclose material information publicly in the past.
Credit Suisse said it plans to file a hearing with Nasdaq hearings possibly within 30 to 40 days of the request.
Guo Yafu, New York investment expert and head of Tianjiao Asset Management, said :" This is a very humiliating brand that hit Chinese listed companies in the United States. "
Ruisuke Coffee is a Chinese coffee chain founded in 2017. By the end of 2019, the Xiamen-based chain had opened 4,500 stores mainland China. By promoting performance strategies, Ruisuke quickly became the world's fastest-growing coffee brand, surpassing the local business of the American coffee chain Starbucks (Starbucks).
Credit Suisse raised $561 million in its US initial public offering (IPO) in May 2019. Shares soared 50% at the start of the nasdaq listing.
The company's revenue fraud scandal was disclosed on april 2,2020. In a filing with the sec, the board said it had conducted an internal investigation into the possible forgery of $310 million in sales by its chief operating officer, and that the company's expenses had accordingly been inflated.
Well - prepared fraud?
"If you write by short company, Ruisuke coffee is completely prepared, that is, its data fraud does not start from the accounting end, but from the sales end every day up ," Guo said. "
Last week, the company said it had terminated its chief executive and chief operating officer duties after investigating the misconduct in a false transaction.
"If Lucky loses the hearings appeal, the stock will be traded over the counter after it delisted from NASDAQ, and the stock price may fall further. "Financial Investment Consultants Motley Fool said.
There have recently been two similar scandals, according to TechCrunch news website reported by the interest-rate technology company ," a similar accounting violation scandal is quietly taking place in the "good future education group "(TAL Education Group), a chinese education group listed on the New York stock exchange. Then, overnight, Moody Waters (Muddy Waters), the same company that exposed Ruisuke Coffee, released a new report referring to possible fraud at "with whom to learn "(GSX Techedu). Moody's report refers to nearly 70 percent of students who learn from an education company are' robots' and the company overstates its finances. The education company denied accusation ." shares of "who to learn "(GSX) were $33.88 on Tuesday and" good future "(TAL) was $55.94.
Trump strongly urge Chinese companies to abide by American rules
On thursday, Trump president of the united states said in an interview with fox finance (FOX Business) journal that he was considering whether to require chinese companies to comply with u.s. parliament accounting rules to list on New York stock exchanges, despite concerns that the move could prompt chinese companies to list in london or hong kong.
He said he was "very strongly" imposing such demands on Chinese companies, and that Chinese companies currently listed on New York stock exchanges did not need to follow the same accounting rules as American companies.
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Already on Monday, the White House has ordered the government of pension funds, the federal retirement savings investment, to withdraw its $4 billion stake in Chinese companies. The U.S. government and parliament are also studying other measures aimed at Beijing.
These measures may include giving Americans prosecute Chinese rights, to compensate for the damage to economic and human life caused by the new pandemic, imposing sanctions and travel bans, and restricting loans from American companies to Chinese companies.
A lot of Chinese companies are going to step on two boats
Mr guo said the Trump's concerns were justified by the fact that many chinese companies were ready to go to hong kong for a second listing ." Twenty-four of them are qualified, they' re all in the u.s. now, they're looking for a way back. If the u.s. government wants all the chinese companies leave, they' ll have no place to go. All of them are good companies, including Baidu, Jingdong and so on. "China's e-business giant Alibaba has been listed twice in Hong Kong in early 2019.
The bloomberg news (Bloomberg) reported that nasdaq is planning new rules to make initial public offerings of some chinese companies more difficult "to bring u.s. exchanges into the middle of an increasingly heated debate about financial links between the world's largest economic. According to the NASDAQ submission, the proposed legislation includes minimum funding thresholds and stricter audit requirements.
Nasdaq's proposal includes asking foreign companies to raise at least $25 million in IPO, or at least a quarter of their market value after listing. Of the 29 chinese companies listed on nasdaq in the past decade ,10 are below $25 million, according to bloomberg.
Nasdaq's proposal would apply to so-called restricted market companies that restrict access to information by U.S. regulators on grounds of national security or other law.
China currently refuses to let the u.s. accounting oversight board share its company's financial records and audit details, as do three other countries and regions, belgium, france and hong kong.
Last month, the sec issued a strong statement warning investors that they should be aware of the lack of visibility in the accounts of emerging market companies, including china.
NASDAQ proposes more standards
The more stringent standards proposed by NASDAQ also include requiring auditors to demonstrate sufficient IAS expertise to perform the audit.
The proposal also requires a listed company to have a senior manager or director with relevant experience in a U.S. listed company, or to consultants with similar experience.
'It's not easy for NASDAQ ,' Mr. Kuo said .' It's too strict. A good company wo n' t come they can't come, and NASDAQ's income will come down. "
Guo Yafu believes that auditing alone is not the way to solve the problem ." It is very difficult to examine the problem by auditing, or it depends on to rely on good faith, that is to say, if you violate the law,, you will lose your fortune, or there is a prison sentence, the cost of crime is very high, the biggest problem I think is that the cost of crime is not high enough. America and china must work together in a spirit of global cooperation to combat drug. That is the right way. "
"Don't forget that all the companies in the U.S. are U.S. investment banks, U.S. auditors, U.S. lawer, and many of them are U.S. investment banks, or at least these people are accomplices, said Mr. Guo. "
He believes that the current climate of decoupling from China is "all-around ". "
