Alibaba has released a filing that states that the U.S is investigating into its accounting practices. The Securities and Exchange Commission had requested Alibaba to voluntarily submit documents and any information pertaining to its affiliate companies and programs.

The U.S investigators want to dig deeper and gather information on Alibaba’s logistics network – Cainiao, data regarding the largest sale day(Single’s Day), policies and practices applicable to related party transactions in general and other transactions. Alibaba has reported that it fully co-operating with the SEC officials and rest assured, the commission has also told the company that the information request shouldn’t be taken as any indication of federal securities law. This is not a tax or financial raid.

This is just a routine check to unveil how the e-commerce giant, Alibaba is able to bring in enormous amounts of cash and where it is being utilized. Some investors have long questioned the integrity of Jack Ma’s corporation, ever since the company’s IPO had a ballastic listing on the NYSE. Alibaba also upped the ante when it surpassed it’s previous Single’s Day sale figure with a staggering $5 million dollars, amounting to $14.3 billion in 2015 as compared to $9.3 billion last year. This provoked the investors even more to probe into the Chinese giant who is still able to process transactions worth billions in a period of slowdown.

There is no news of what the investigation into Cainiao – the logistics network or Ant Financial – the company behind AliPay is expected to reveal, but the Chinese analysts believe that this probe’s outcome could open doors for further investigations, and potential lawsuits could stem off findings from this investigation.

Alibaba’s logistic network – Cainiao was founded three years ago and the Chinese giant holds about 48 per cent shares of the company. In it’s annual report, Cainiao reports an operating loss of 295 million yuan(45 million USD) in fiscal year 2016, but unlike last year when the costs paid to the network accounted for a part of the company’s revenue is missing from this years fiscal report.

In a statement to WSJ, a spokeswomen from Cainiao has said that,

[These disclosures are] exactly the kind of robust and transparent information that will address the underlying issues in the SEC’s inquiry.

These disclosures, as mentioned above will help investigators and investors better analyze the positioning of Alibaba in the Chinese e-commerce space. But, the crux of the matter lies in the fact that Alibaba has been very forthcoming and helping in the probe, so it might seem that the company has nothing to hide and be afraid of. There is no word on how the investigation will defer the company’s expansion plans into India and other developing markets.

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