- Luckin Coffee and TAL Education have each in the last two weeks disclosed fraud within their companies.
- But some in the cross-border listing business say Chinese companies are still intent on listing in New York, despite postponements caused by the coronavirus or geopolitical tensions.
- In the near term, annual audits delayed by the coronavirus mean more corporate issues may come to light soon, said Drew Bernstein, co-chairman of MarcumBP, which audits and advises pre-IPO and public Chinese companies.
For many Chinese companies, their dreams of listing in New York are only on hold.
Some high-profile Chinese stocks listed in the U.S. such as Luckin Coffee, the self-proclaimed Starbucks rival in China, have been rocked following allegations by short-sellers that these companies faked their numbers, accusations that in some cases are now being internally investigated.
The reports are the latest challenge for Chinese initial public offerings in New York, on top of U.S.-China trade tensions and the impact of the coronavirus.
But some in the cross-border IPO business say the listing plans are just delayed, not canceled.
Why wouldn’t they?
Worst case scenario is they get caught for fraud after falling out of favor with the CCP, and get a slap on the wrist. They also get to keep the $ given to them during the IPO.
They literally have every incentive to keep doing this until there are actually some real consequences, or this type of behavior is entirely blocked.