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Burned by Luckin Coffee, US steps up scrutiny of China startups

Recent troubles reignite yearslong tug-of-war between SEC and accounting firms

Luckin Coffee, which debut on the Nasdaq Market later year to great fanfare, admitted to grossly inflating revenues.   © Reuters

SHANGHAI -- With the admission of fraudulent accounting by Luckin Coffee and TAL Education having shattered investor confidence, Chinese startups that debuted to fanfare on U.S. stock exchanges face ever-growing pressure to step up transparency.

Nearly 200 Chinese companies are currently listed on the New York Stock Exchange and the Nasdaq stock market. Many of them are audited by "Big Four" firms, as is Luckin, by Ernst & Young, and TAL Education, by Deloitte Touche Tohmatsu.

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