According to the disclosed documents, the decision of delisting made by the SEC listing Qualification Committee is based on two reasons: according to the article 5101 of NASDAQ listing rules, the false trading behavior disclosed by Ruixing coffee on April 2nd caused public interest concerns; according to the article 5250 of NASDAQ listing rules, Ruixing coffee failed to disclose effective information in the past, and passed the previous The business model makes false transactions.
One year ago, on May 17, 2019, Ruixing logged into NASDAQ in only 18 months since its establishment, creating the fastest listing record of China in the United States.
In the early hours of the morning, Lu Zhengyao, chairman of Ruixing coffee, issued a statement saying that Nasdaq asked the company to withdraw from the market before the final results of the investigation. Unexpectedly, he was deeply disappointed and regretted.
In his statement, Lu Zhengyao first apologized to investors, all Ruixing employees and customers for the adverse impact of the incident. However, he believes that Ruixing has dealt with the relevant responsible persons, reorganized the board of directors, updated the management and actively carried out rectification in the first time according to the phased investigation results, but NASDAQ asked the company to delist before the final investigation results, which is unexpected, and I am deeply disappointed and regretted.
He also said that he firmly believed that the business model and business logic of Ruixing coffee were established, and the annual revenue of Ruixing coffee has continued to grow since its operation. My style may be too radical, the enterprise runs too fast, which also leads to many problems, but I do not cheat investors by concept. Lu Zhengyao said that the funds obtained from pledging Ruixing coffee shares are all used to support the operation and development of its enterprises, not for personal waste, not to transfer assets, and is willing to accept any investigation.
The following is the full text of Lu Zhengyaos statement:
1. Once again, I sincerely apologize to all investors, all employees and customers for the adverse impact of Ruixing coffee incident! Based on the respect for the investigation of the special committee, I have never responded to any medias query on my own about the Ruixing coffee incident, and therefore let my friends who helped me start my business bear many unnecessary charges. At the same time, I solemnly apologize to them and believe that the final investigation can give everyone an objective and fair evaluation.
2. According to the public disclosure of Ruixing coffee, at present, the company has also dealt with relevant responsible persons, reorganized the board of directors, updated the management and actively carried out rectification according to the phased investigation results. However, NASDAQ asked the company to delist before the final investigation results, which is unexpected. I am deeply disappointed and regretted.
3. In the past 20 years since I started my business, I have successively participated in the establishment of Shenzhou car rental, Shenzhou special car and Ruixing coffee, all of which are well-known brands in various fields. Through model innovation and technology application, I have provided real products and services for the majority of users, and also solved the employment of tens of thousands of employees. I have always been in the front line of industry. My style may be too radical and the enterprise runs too fast, which also leads to many problems. But I do not cheat investors with the concept. I really want to make the enterprise bigger and better and create value for the society! Whenever I see people holding small blue cups in their hands, I feel proud.
4. I firmly believe that Ruixing coffees business model and business logic are established. Since its operation, Ruixing coffees annual revenue has continued to grow. At present, despite the double blow of the epidemic and fraud, thousands of Ruixing stores are still trying to adhere to the operation, tens of thousands of employees are still working diligently, Ruixings product reputation is very good and brand toughness, sincerely ask all sectors of society to give tolerance and support, I thank you here!
5. Since I started my business, almost all of the money I earned has been invested in the real enterprises. The money I got from pledging Ruixing coffee stock has also been used to support the operation and development of its various enterprises. It has not been used for personal extravagance, nor for the transfer of assets. I am willing to accept any investigation on this.
6. Over the past month, I have been in deep pain and remorse, unable to sleep at night. If the company delisted, the difficulties and pressure will continue to increase, but no matter what, I will try my best to maintain the store operation, try my best to recover the loss of shareholders, so that the brand of Ruixing can go on.
NASDAQ responds to Ruixings delisting
NASDAQ said it could not comment on individual shares, but that all companies would follow the uniform rules of the exchange. According to the information on the website of NASDAQ listing center, a listed company must make a request for holding a hearing within 7 natural days after receiving the delisting notice. The company can choose to hold a hearing in oral or written form, and the cost of the hearing is US $10000. At the hearing, the enterprise has about 50 minutes to make a statement. The hearing committee usually publishes a written decision within 30 days after the hearing. Before that, the above-mentioned companies can continue to be listed.
Ruixing coffee shares will resume trading at 7:00 a.m. EDT on May 20 (19:00 GMT on May 20). Its shares have been suspended since April 7 after the company launched an investigation into the forgery and apologized. Before the suspension, the share price plummeted more than 75% in one trading day due to disclosure of trading fraud.
In a regulatory announcement, Ruixing coffee said that the NASDAQ Exchange on May 15 raised concerns about the companys trading fraud and the lack of public disclosure of material information in the past. The company will remain listed pending the outcome of the appeal hearing. It is expected that the hearing will be arranged within 45 days after the application for hearing is made.
The announcement comes at a time of rising economic tensions. NASDAQ plans to tighten Listing Rules for companies from China, France and other markets that involve national security or have laws restricting access to information by US regulators. According to the announcement, NASDAQ also plans to set minimum financing scale and requirements for circulating shares.
Lu Zhengyao resigns as chairman of the corporate governance committee
Ruixing CEO Qian Zhiya is dismissed due to financial fraud
According to the latest shareholder information of Ruixing coffee, Lu Zhengyao currently holds forty-eight point four nine Billion B shares, including common B shares 39.12% , owned by 36.86% The right to vote is the largest shareholder.
But after the black swan incident, foreign media quoted Goldman Sachs Group as saying that Haode investment, controlled by Chairman Lu Zhengyao, failed to fulfill one five point one eight US $billion margin loan plan, the lender will exercise the lenders right to take enforcement procedures to sell 76.3 million shares of Ruixing coffee us ADSS.
According to Reuters, there are five point one five 100 million shares of Ruixing coffees class B common shares and 95.45 million shares of class a common shares were pledged to secure the loan, including additional shares pledged by entities controlled by Ruixing coffee CEO Qian Zhiyas family trust.
In addition, Ruixing coffee announced the progress of internal investigation on financial fraud on the 12th. According to the announcement, the internal investigation committee put forward some evidences to the board of directors that could explain the fraud of the companys transaction data, and accordingly terminated CEO Qian Zhiya and coo Liu Jian. This is Ruis first statement that Qian Zhiya is also related to fraud.
According to the announcement, Ruixings board of directors appointed Guo Jinyi, a director and senior vice president, as acting CEO of Ruixing. Guo Jinyi, like Qian Zhiya and Liu Jian, is also Lu Zhengyaos Shenzhou Department general. He used to be chairman assistant of Shenzhou Youche. In May 2018, during the storm of Ruixing informing Starbucks of industry monopoly, Guo Jingyi once made a high-profile statement that Ruixing coffee has no intention of speculation.
240 institutions affected
As for whether Ruixing coffee is facing bankruptcy, according to relevant lawyers, being delisted will have a significant adverse impact on Ruixing coffee, especially in terms of financing, which will indeed increase the possibility of bankruptcy of the company.
For investors, delisting does not affect the investors continuous claims, but being delisted means that the listed companys compensation ability and economic situation are worse. According to the analysis of song Yixin, a lawyer in Shanghai, if we take the period from the beginning of 2020 to the present, it is roughly estimated that Ruixing, who is facing class action, will face a total compensation of about 11.2 billion US dollars, equivalent to 75.4 billion yuan.
According to statistics, as of the end of the first quarter, there were 240 institutions holding Ruixing coffee, accounting for up to 34.43% u3002
According to tiger trade data, as of May 1, traditional investment managers held by capital research and management companies one thousand and eight point seven seven 10000 shares, holding ratio of 3.98% ;
New York Life Investment Company, pilot, Goldman Sachs and Wellington management company also hold a certain proportion of Ruixing coffee.
In terms of hedge funds, Melvin capital, Renaissance and tybourne capital also hold more than 2 million shares of Ruixing coffee.
In terms of investment banks, Morgan Stanley holds lucky coffee three hundred and sixty-four point nine one 10000 shares, holding ratio of 1.44% ;
Credit Suisse, Barclays, rich countries of the United States and so on also hold lucky coffee.