The SEC is investigating Alibaba

The SEC is investigating the world's largest e-commerce firm, Alibaba, over its accounting practices.

The investigation was disclosed in Alibaba's annual report on Monday, and the company said that it is complying with federal regulators.

Here's the key part of their annual report [emphasis ours]:

Earlier this year, the U.S. Securities and Exchange Commission, or SEC, informed us that it was initiating an investigation into whether there have been any violations of the federal securities laws. The SEC has requested that we voluntarily provide it with documents and information relating to, among other things: our consolidation policies and practices (including our accounting for Cainiao Network as an equity method investee), our policies and practices applicable to related party transactions in general, and our reporting of operating data from Singles Day.

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. 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.

Alibaba was founded by Chinese billionaire Jack Ma, and went public on the New York Stock exchange in 2014 in the biggest IPO ever. The stock fell about 3% on the news of the investigation.