Alibaba Group Holding Ltd. is being investigated by US securities regulators for its accounting practices.
The Securities and Exchange Commission (SEC) has asked the Chinese e-commerce giant to voluntarily provide information related to its accounting for its logistics network, operating data for the largest online shopping day of the year and other “related party transactions in general”, the Wall Street Journal reports citing a regulatory filing.
Alibaba said in the filing that it is cooperating with the SEC, and that the commission told it the request for information shouldn’t be taken as an indication of any violation of federal securities law.
Investors are concerned about the company’s growth prospects amid a slowdown in China’s economy.
After a meteoric rise following its blockbuster US$25 billion initial public offering in 2014, Alibaba’s stock price fell below its US$68 IPO price on concerns about its outlook.
Analysts said the probe’s outcome could open doors for further investigations or potential lawsuits.
Alibaba shares fell about 4 percent to US$77.76 at noon Wednesday in New York trading.
Some analysts and investors have long questioned the transparency of Alibaba’s financial statements, particularly the way it self-reports gross merchandise volume for Singles’ Day.
The Nov. 11 Chinese holiday is a major online shopping day akin to Cyber Monday in the US Last year, the company reported sales of more than US$14 billion on that day alone.
The numbers could be overstated, analysts say, as Alibaba includes transactions that have been placed, but not completed, including returns.
Alibaba also has grappled with online merchants faking sales on e-commerce platforms to increase their place in search rankings.
Alibaba has said in the past that it increases its efforts on Singles’ Day to eliminate the practice, known as “brushing.”
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