Born every minute

7 April 2020 By Pete Sweeney Follow @petesweeneypro

Morgan Stanley, Credit Suisse and others face big losses after the founder of Starbucks’ Chinese rival defaulted on $518 mln of loans amid fraud charges. The lenders are stuck offloading a huge stack of share collateral in a falling market. It’s the price of blindly chasing fees.

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Luckin Coffee Chairman Lu Zhengyao and Chief Executive Qian Zhiya have handed over shares in the embattled Chinese coffee chain to banks after a company controlled by Lu's family defaulted on $518 million in loans, Reuters reported on April 7. The lenders include Goldman Sachs, Morgan Stanley, Credit Suisse, Haitong, China International Capital Corp and Barclays, sources told Reuters.

Luckin said on April 2 that much of its 2019 sales were fabricated, sending shares plunging as much as 90% from a January peak in U.S. trading and sparking an investigation by China's securities regulator.

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