In the news: Alibaba faces SEC probe, Goldman sees 70% chance of China MSCI inclusion and BOC Aviation goes public for $1.1 billion

May 31, 2016 | BY

Katherine Jo &clp articles

This week the SEC requested accounting information from Alibaba, Goldman Sachs raised the odds of Chinese shares being included in MSCI indexes and Bank of China's aircraft leasing arm went in for an IPO

Alibaba faces SEC investigation over accounting practices

Alibaba Group Holding Ltd. said it is being investigated by the U.S. Securities and Exchange Commission (SEC) over its accounting practices and whether they violate federal laws. The SEC requested information from the world's largest e-commerce platform relating to its Singles' Day extravaganza on November 11, Alibaba's biggest shopping day, and how the company consolidates results from affiliated businesses including logistics partner Cainiao Network and other related-party transactions. Alibaba said that the SEC's request should not be construed as an indication that any violation of federal securities laws has occurred. Alibaba's accounting practices have prompted concern from investors for a while, with the latest focus on the staggering $13.7 billion in sales earned within the 24 hours of Singles' Day. The SEC issue is apparently related to the company's definition of gross merchandise volume, which means total transactions and allegedly doesn't deduct fake orders (sellers purchasing their own products to boost ratings). This could have inflated sales figures by up to 30%, one analyst said. The market is generally in agreement that the aim of the probe is to increase transparency. Similar inquiries have been made to other Chinese internet companies due to a lack of familiarity with how they are set up and operate.

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