Alibaba Group Holding Ltd BABA 3.65% shares were down 4.3 percent in early trading on Wednesday following the disclosure of an ongoing SEC investigation into the company’s accounting practices. According to Alibaba’s new annual report, the SEC initiated an inquiry back in January 2015, and the company has been cooperating with the investigation by providing documents and information to the commission.

“We intend to continue to cooperate fully with the SEC’s inquiry and to provide the SEC with the requested information,” the report read.

“However, the inquiry has resulted and could continue to result in considerable legal expenses, the diversion of a significant amount of management’s attention from other business concerns and could harm our business.”

Bloomberg reported the investigation is focused on consolidation practices, related party transactions and reported Singles’ Day data.

Commentary

“The SEC advised…

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