Alibaba Is Under SEC Investigation for Its Accounting Practices by Lucinda Shen @FortuneMagazine May 25, 2016, 11:48 AM EDT E-mail Tweet Facebook Linkedin Share icons The Chinese equivalent of Amazon amzn , Alibaba baba , is under investigation by the Securities and Exchange Commission over its accounting practices and at least one of the company’s off-balance sheet arms, which may have inflated Alibaba’s earnings. “Earlier this year, the U.S. Securities and Exchange Commission, or SEC, informed us that it was initiating an investigation into whether there have been any violations of federal securities law,” Alibaba stated in a financial filing. The SEC has requested documents and information regarding the company’s consolidation practices, related party transactions, and reporting of it’s single most profitable and extravagant sales day, Singles’ Day. Alibaba acknowledged that it is cooperating with the SEC and voluntarily disclosing information to the Commission. It’s not the first time doubt has been cast over Alibaba’s earnings figures. Prominent investors including Bronte Capital’s John Hempton and Kynikos Associates’ Jim Chanos have dubbed Alibaba’s accounting practices potentially fraudulent or even reminiscent of Enron. Both Hempton and Chanos have pointed out a red flag: Alibaba’s delivery. Hempton noted that Alibaba ships more parcels on Singles’ Day than Amazon had users in a year—which would require an enormous amount of capital to process. “To truly deliver at a larger intensity than Amazon, Alibaba and its outsource network would need more staff or capital (or both) than Amazon and UPS ups combined,” Hempton wrote, among a host of other concerns in a September post. But the cost of packaging and making those deliveries are excluded from earnings reported to American shareholders, Chanos said in May after revealing a short position in the stock. That’s because Alibaba’s delivery falls under unconsolidated separate entities—one of which would be Cainiao Networks—which are not included in Alibaba’s statements. Incidentally, Alibaba noted that how it accounts for profits stemming from its investment in Cainiao Networks is also under investigation. Cainiao Network is a three-year-old joint venture that processes deliveries. It processes about 70% of all parcels in China, according to Tech Node. The tech giant, headed by Jack Ma, was previously under investigation over whether it had violated federal securities laws in Jan. 2015, though that case was concluded without enforcement action. “Singles’ Day,” China’s antithesis to Valentines Day, is an enormous retail holiday in the country. It netted $14.3 billion on a single day in 2015 for Alibaba alone. That’s more than three times the amount spent online by Americans on Black Friday weekend in 2015: $4.45 billion.