AP7, Stockholm, and the $4.5 billion Louisiana Sheriffs’ Pension & Relief Fund, Baton Rouge, settled a lawsuit over fabricated sales figures with Luckin Coffee, an AP7 spokesman confirmed.
A securities class action was filed in the U.S. District Court for the Southern District of New York. The company, which operates a network of retail coffee stores in China, agreed to pay $187.5 million to settle the lawsuit.
As part of the settlement, Luckin acknowledged in April 2020 that it had provided fabricated figures of nearly $300 million in sales between the second and fourth quarters of 2019, prior to the company's listing in the U.S.
In September 2020, plaintiffs filed a complaint stating that Luckin's officers and directors violated the federal securities laws by making material misrepresentations and omissions to investors in connection with revenues and expenses, compliance with laws and regulations, internal controls over financial reporting, and undisclosed related-party transactions.
Luckin was delisted from Nasdaq in June 2020 and filed for bankruptcy in the U.S. in February.
Law firm Kessler Topaz Meltzer & Check and its co-counsel represented AP7 and its co-lead plaintiff in the class action.
“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,” Richard Grottheim, CEO of AP7, said in a news release.
John Rizio-Hamilton, partner at Bernstein Litowitz Berger & Grossmann, which acted as Louisiana Sheriffs' Pension & Relief Fund's counsel, confirmed that the pension invested approximately $1.6 million in Luckin Coffee securities.
AP7 has 722.5 billion Swedish kronor ($82.5 billion) in assets. How much it invested in Luckin could not be learned.