Alibaba’s SEC Probe: What’s Missing From This Disclosure?

Alibaba’s SEC Probe: What’s Missing From This Disclosure?
Analyst Summary: On 24-May-2016, Alibaba Group disclosed what appears to be an informal SEC investigation. This is the first time this matter has been disclosed. Details are scant, leaving the investor unable to adequately assess the risk it poses. Using the template of who/what/where/when/why, we will examine what is missing. Our conclusion is you are left with a risk that management views as material but you cannot analyze. We generally recommend avoiding such scenarios.
Facts of Interest or Concern: The following is Alibaba Group’s disclosure from the 20-K filed 24-May-2016 –
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. [emphasis added] We’ve not researched Alibaba Group in the past. Therefore we have no history or documents in our database on this company.

This post was published at Zero Hedge on 05/27/2016.