Sweden’s AP7 has been successful in a class action against Chinese company, Luckin Coffee, in which it acted as co-lead plaintiff.

The case, which was due to be heard in the United States District Court for the Southern District of New York, was settled on 21 September with Luckin Coffee agreeing to pay USD 187.5m to those affected investors that joined the class action. Law firm Kessler Topaz and its co-counsel represented AP7, having been appointed in June 2020.

Commenting on the success, AP7 CEO, Richard Gröttheim, said: “This settlement with Luckin Coffee is a clear example of how AP7 uses legal proceedings to hold companies we invest in liable when they make mistakes that disadvantage shareholders. Not all capital owners pursue legal proceedings against companies, but when we win a case like this, it benefits all shareholders.”

Luckin is a Cayman Islands corporation that operates an extensive network of retail coffee stores in China. Luckin conducted an initial public offering of American Depository Shares on 17 May 2019 and a secondary public offering on 10 January 2020. The action stems from Luckin’s admitted fabrication of nearly USD 300m in sales between the second and fourth quarters of 2019.

Following an investigation, in September 2020, lead plaintiffs filed the Amended Complaint, which alleged that Luckin and certain of its officers and directors violated the federal securities laws by making material misrepresentations and omissions to investors in connection with Luckin’s public offerings concerning the company’s reported revenues and expenses, compliance with laws and regulations, internal controls over financial reporting, and undisclosed related-party transactions.

Luckin Coffin chairman and CEO, Dr Jinyi Guo, said: “Upon final approval, this settlement will resolve a significant contingent liability and enable Luckin Coffee to move forward with a greater focus on our operations and the execution of our strategic plan. We are working diligently to enter into formal settlement agreements and obtain the necessary court approvals.”

Share Story: