The investigation - disclosed Wednesday in a stock filing - appears to focus on how Alibaba deals with a web of companies in which it owns stakes or has some say in the operations. The company said the Securities and Exchange Commission was investigating how Alibaba accounts for affiliated companies, including a logistics venture, and how it treats related-party transactions.

It also puts under scrutiny Alibaba's handling of Singles Day, a one-day shopping event in China that the company says gave it the world record for most online sales volume in a day. Alibaba said it had provided the commission with information about how it reported data from that event.

Alibaba said that it was voluntarily cooperating with the commission, and that the investigation was not an indication it had violated any law.

Still, the disclosure risks tarnishing a rare Chinese company that has won global fame for its business acumen. Two years ago, Alibaba raised $US25 billion ($35 billion) in the world's largest initial public offering. Its executive chairman, Jack Ma, rubs elbows with global technology and political leaders. Last week, he attended a private lunch with President Barack Obama at the White House.

But as Ma's profile has risen, Alibaba has grappled with challenges, including allegations from the owners of famous brands that it takes a lax stance on counterfeit goods on its sales platforms - a charge it denies.

Shares seesawed

Its shares have also seesawed over investor concerns about China's slowing economic growth and Alibaba's enormous shopping spree to try to cater to the growing legions of Chinese consumers who order everything from taxis to in-home massages on their smartphones. The company has spent billions of dollars on services as varied as logistics, food delivery and film production.

It is unclear whether the investigation will have an impact on Alibaba. Asked for comment, an Alibaba spokeswoman reiterated the company's statement to the commission.

Alibaba's share price has stabilised in recent months. In the most recent quarter, the company had strong revenue growth despite the broader worries about China's slowdown.

Alibaba is at the centre of a complicated web of companies in China that broadly touch the lives of Chinese consumers.

Ma also controls the parent company of an electronic payment service called Alipay. Alipay is a giant in its own right, with a financial smartphone app widely found on Chinese handsets and with offerings including money-market-like investments and easy money transfers. Chinese consumers often use Alipay to buy merchandise from Alibaba's platforms.

Alipay, which was valued at about $US60 billion in its last fundraising round, was once part of Alibaba but was peeled off into a separate company in 2011 in a move that spurred acrimony with Yahoo, then a major investor in the Chinese company.

Alipay's parent company says that, to date, it has lent more than $US100 billion, mostly to small businesses. Those businesses could spend that money on marketing on Alibaba's e-commerce sites, which would in turn become Alibaba revenue.

According to data from Dealogic, Alibaba has also spent $US25.5 billion since its listing in September 2014 to broaden its services to compete with Tencent and Baidu, fellow Chinese Internet giants that are scrambling to make money from a shift to mobile devices. Its key investments and acquisitions include its purchase of Youku Tudou, once a YouTube-like service that now streams movies and TV shows, and an investment in Koubei, a food-ordering app in which Alipay's parent company is also an investor.

Logistics network

One focus of the SEC investigation appears to be Alibaba's investment in logistics, which itself signaled a shift in its business approach. In its filing, Alibaba said it had provided information to the commission about its logistics arm, Cainiao.

Alibaba has long eschewed building a logistics network to keep down costs. That approach has increased profit margins but made it more vulnerable to competitors with better control over delivery channels, which are underdeveloped in China.

As Chinese e-commerce rivals offered fast delivery, Cainiao was created in 2013 as a way to make Alibaba's logistics more efficient. Cainiao is jointly owned by Alibaba and a number of the logistics companies that deliver the bulk of the goods ordered on Alibaba's sales platforms, like Taobao and Tmall. At the time, Alibaba said Cainiao would spend up to $US16 billion in developing smart logistics in China in the coming years.

Ma was named as chairman when Cainiao was created, Alibaba holds a 47 per cent stake in the company, and a number of companies that Alibaba has invested in have since worked with Cainiao. Still, Alibaba does not consolidate Cainiao's results with its own.

That relationship has been questioned by some short-sellers and researchers. In a 40-page report released to its clients in October, Pacific Square Research, a market analysis firm, argued that Alibaba did not disclose enough information about its large number of investments. It said that at times Alibaba used that web of investments to control companies like Cainiao without taking their losses onto its balance sheet.

The Alibaba spokeswoman said that the company had provided disclosures about Cainiao's financials in its most recent annual report. That "is exactly the kind of robust and transparent information that will address the underlying issues in the SEC's inquiry," she said.

'Ball of wet knotted yarn'

Alibaba recorded losses of about $US60 million over the past two years in connection to Cainiao, according to the filing.

The Pacific Square report also described instances that it said showed that Alibaba did not disclose related-party transactions. For example, it said that Alibaba had failed to disclose the amount it had spent in advertising on Weibo, a Chinese social-media service, even though at that time Alibaba had made a $US1 billion investment in Weibo. By comparison, Weibo, also a listed company, disclosed the amount it had received from Alibaba.

In its most recent filing, Alibaba disclosed that it had spent about $US230 million on Weibo marketing in the past three years.

"We haven't seen anything quite as difficult to untangle as this in our respective careers," Herb Greenberg, a managing partner of Pacific Square, wrote in an email. "In our view, Alibaba is like a big ball of wet knotted yarn."

Asked about Pacific Square's assertions, the Alibaba spokeswoman said the company did not comment on market speculation.

The New York Times