Alibaba faces SEC probe into Singles Day data

Shares in the Chinese e-commerce giant were heavily impacted by the disclosure

Alibaba, China’s e-commerce giant, has disclosed that it is at the centre of an investigation by the U.S. Securities and Exchange Commission (SEC).

The investigation, which is ongoing, concerns Alibaba’s consolidation policies and practices, including its accounting for Cainiao Network as an equity method investee; its policies and practices applicable to related party transactions in general; and its reporting of operating data from Singles Day.

Singles Day, held on 11 November, is celebrated across China and is a shopping day put on for consumers that are single. Also known as Guanggun Jie, Singles day was created by Alibaba in 2009 with just 27 merchants but has since grown into the biggest shopping day in the world. Last year’s singles day generated a GMV of more than $10bn. Alibaba said that the event pulled in more than $14bn in sales for the company in 2015.

Alibaba made the SEC disclosure in its recent Annual Report on Form 20-F for Fiscal Year 2016. It noted in the report: “We are voluntarily disclosing this SEC request for information and cooperating with the SEC and, through our legal counsel, have been providing the SEC with requested documents and information.”

It added: “The SEC advised us that the initiation of a request for information should not be construed as an indication by the SEC or its staff that any violation of the federal securities laws has occurred. This matter is ongoing, and, as with any regulatory proceeding, we cannot predict when it will be concluded.”

However, shares of Alibaba were badly affected by the news. At the time of press, shares were at $77.98, a significant way away from the 52 week high of $91.93 and a fall of nearly 7% as of 25 May.

Alibaba has recently been taking steps to boost the transparency and ethical practices of the company. Just last month, Alibaba signed up to the International AntiCounterfeiting Coalition (IACC). However, this move was not received well by the likes of Gucci and Michael Kors, which promptly exited the coalition as a direct result of Alibaba joining.

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