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China's Alibaba attracts attention from U.S. regulator

Published 02/13/2015, 06:26 PM
© Reuters. People ride a double bicycle past a logo of The Alibaba Group at the company's headquarters on the outskirts of Hangzhou

By Edwin Chan and Noel Randewich

SAN FRANCISCO (Reuters) - Alibaba Group Holding Ltd said on Friday it was asked by the U.S. Securities and Exchange Commission for information about its dealings with a Chinese regulator, coming just five months after the company's stock market debut.

The SEC's request follows an unusually public fracas between Alibaba and China's State Administration for Industry and Commerce, or SAIC, over the issue of fake products being sold on the company's websites and a series of related lawsuits filed in the United States.

The e-commerce titan said in a statement it was cooperating with the SEC's request, but gave no details about what the regulator specifically wanted.

"The SEC letter states it should in no way be construed as Alibaba Group having done anything wrong or there having been any violation of securities law," Alibaba said.

Wall Street is becoming increasingly concerned that Chinese regulators are sharpening their scrutiny of counterfeit products on e-commerce sites, an endemic problem that Alibaba and others have fought for years.

Last month, SAIC said in a now-retracted "white paper" that it had met with Alibaba before the company's blockbuster New York stock market listing to discuss the issue of fakes sold on its platform, but had withheld publishing any report so as not to affect the initial public offering in September.

Alibaba's shares fell 4.4 percent the day the SAIC report was published, spurring lawsuits in the United States alleging that the company failed to disclose risk factors to investors.

© Reuters. People ride a double bicycle past a logo of The Alibaba Group at the company's headquarters on the outskirts of Hangzhou

Alibaba, whose $25 billion IPO was the world's biggest, is sensitive to accusations about its efforts to suppress counterfeit products.

Meanwhile, Beijing, facing persistent U.S. pressure, has declared protecting intellectual property a government priority.

Shares of Alibaba were down 0.62 percent in extended trade on Friday, after closing up 2.24 percent at $89.05 on the New York Stock Exchange. 2015-02-13T222453Z_2_LYNXMPEB1C0XW_RTROPTP_1_CTECH-US-ALIBABA-GROUP-INSURANCE.JPG

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