Luckin went public in the U.S. in May 2019, listed in NASDQA and raising $561 million. Its success drew in big international investors such as BlackRock Inc. and support from banks including Credit Suisse Group AG. However, Muddy Waters Research’s 89 page report claimed that Luckin was inflating the number of items sold per day by 69% in the third quarter of 2019 and 88% in the fourth, purportedly revealing fraud within Luckin. Both Luckin’s Chairman & co-founder Lu Zhengyao and co-founder Qian Zhiya were removed from the board of directors. Should both co-founders be liable for the shareholders’ investment loss as the element of fraud was revealed even though a public limited company has limited liability?

Luckin went public in the U.S. in May 2019, listed in NASDQA and raising $561 million. Its success drew in big international investors such as BlackRock Inc. and support from banks including Credit Suisse Group AG. However, Muddy Waters Research’s 89 page report claimed that Luckin was inflating the number of items sold per day by 69% in the third quarter of 2019 and 88% in the fourth, purportedly revealing fraud within Luckin. Both Luckin’s Chairman & co-founder Lu Zhengyao and co-founder Qian Zhiya were removed from the board of directors. Should both co-founders be liable for the shareholders’ investment loss as the element of fraud was revealed even though a public limited company has limited liability?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter17: The Management Of Cash And Marketable Securities

Section: Chapter Questions

Problem 2P

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