Banks including Credit Suisse and Morgan Stanley face a $300 million shortfall on margin loans to the embattled founder of Luckin Coffee.

Credit Suisse Morgan Stanley Luckin Coffee

Banks including Credit Suisse Group AG and Morgan Stanley face a $300 million shortfall on margin loans to the embattled founder of Luckin Coffee Inc.

The lenders, which also include Haitong International Securities Group and Goldman Sachs Group Inc., raised about $210 million over the past two months selling Luckin shares that Chairman Lu Zhengyao had pledged as collateral, people familiar with the matter said. Lu defaulted on $518 million of margin debt in early April, Goldman said in a statement at the time, after revelations of accounting fraud caused the Chinese coffee chain’s stock to plunge.

The share sales represent the latest attempt by Lu’s creditors to limit losses from a scandal that has fueled calls in Washington for tougher scrutiny of financial ties between the U.S. and China. Luckin’s fall from grace blindsided some of the biggest names on Wall Street just as they were gearing up for a historic expansion into Asia’s largest economy.

Spokespeople for the lenders declined to comment. Luckin didn’t immediately respond to multiple requests.

“If you liked the article, share it in ...”