Alibaba’s SEC Probe: What’s Missing From This Disclosure?


Alibaba Group Holding Ltd – $BABA   

We parse the language used in Alibaba's newly-disclosed SEC investigation 

Analyst Summary:  On 24-May-2016, Alibaba Group disclosed what appears to be an informal SEC investigation.  This is the first time this matter has been disclosed. Details are scant, leaving the investor unable to adequately assess the risk it poses. Using the template of who/what/where/when/why, we will examine what is missing. Our conclusion is you are left with a risk that management views as material but you cannot analyze.  We generally recommend avoiding such scenarios.  

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Notes: The SEC did not disclose the details on investigations referenced above. The SEC reminds us that its assertion of the law enforcement exemption should not be construed as an indication by the Commission or its staff that any violations of law have occurred with respect to any person, entity, or security.  New SEC investigative activity could theoretically begin or end after the date covered by this latest information which would not be reflected here.