Francine McKenna’s columns on The Dig are always thoughtful and informative. We particularly appreciate her comments on two last-minute settlements by the Trump/Clayton SEC.
A week after it announced a $200 million settlement with GE for “disclosure failures,” the Securities and Exchange Commission settled with China’s Luckin Coffee for $180 million.
“The Securities and Exchange Commission today charged China-based company Luckin Coffee Inc. with defrauding investors by materially misstating the company’s revenue, expenses, and net operating loss in an effort to falsely appear to achieve rapid growth and increased profitability and to meet the company’s earnings estimates.”
However, just like in the GE case, and despite the SEC calling a fraud a fraud this time, Luckin also agreed to the settlement without having to admit or deny the allegations. The SEC’s “Potemkin village” enforcement action is intended to create the illusion of a regulator doing something to protect investors.A tale of two SEC enforcement actions, Part 2 – Luckin Coffee and GE – The Dig