Alibaba disclosure of SEC probe necessary?

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China’s Alibaba Group disclosed recently in its annual report that the company is being investigated by the US Securities and Exchange Commission (SEC) over its accounting practices, which again put a controversial legal issue under the spotlight, said a legal expert.

Story_1_picThe e-commerce giant was asked by the regulator to provide details of its Singles’ Day promotion, and how it consolidates results from affiliated companies, including logistics partner Cainiao Network.

“The recent Alibaba incident highlights a legal question that has been much debated recently, especially following the decision on 1 February 2016 of the US Court of Appeals for the Ninth Circuit in Lloyd v. CVB Financial Corporation, and that is: Should a company disclose the existence of an SEC investigation?” T.K. Chang, a partner in the New York office of Zhong Lun Law Firm, told China Business Law Journal.

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