Shares of the Chinese e-commerce giant Alibaba were sent tumbling by nearly 7 percent after the company said that the U.S. regulators are investigating Alibaba Group Holding Ltd’s accounting practices to determine whether they violated federal laws.

The investigation by the Securities and Exchange Commission was launched earlier this year, Alibaba said. The firms has been dogged for many years by questions over its relations with affiliated companies and about its growth rate.

As Alibaba also fights sales of fake items, while a continuing acquisition spree creates uncertainty over its earnings, the latest investigation highlights how far Alibaba has to go to improve transparency.

What prompted the SEC investigation was not immediately clear. Alibaba said that the SEC advised it the investigation should not be seen as an indication the company had violated federal securities laws and that the company was cooperating with the authorities.

According to Alibaba’s annual report filed on Tuesday, the accounting practices applicable to related-party transactions in general, and operating data from its annual “Singles’ Day” sale were being investigated by the SEC as the regulatory authority focused on the accounting for logistics firm Cainiao Network, which is around 47 percent-owned by Alibaba.

There have been doubts and questions raised about whether results from the Nov. 11 Singles’ Day promotion of Alibaba are as high as reported, by some merchants in China. The Nov. 11 Singles’ Day promotion had exceeded the combined sales of the Black Friday and Cyber Monday shopping events in the United States. Singles’ Day, when shoppers are encouraged to treat themselves to special deals, has seen transactions worth about $14 billion last year.

Questions by some investors and analysts were raised in the past about Cainiao which has been unconsolidated in Alibaba’s financial statements in the past. Cainiao was started jointly in 2013 by Alibaba, Yintai Holdings, Fosun Group, Forchn Holdings and five major delivery companies.

For the first time Cainiao’s revenue, net loss, assets and liabilities were disclosed in its latest annual report, Alibaba said. Those figures are “exactly the kind of robust and transparent information that will address the underlying issues in SEC’s inquiry”, said Alibaba spokesman Robert Christie.

There are no other undisclosed SEC inquiries, Christie said.

As e-commerce spreads beyond urban hubs and requires a more robust logistics network, Alibaba is trying to take a lead role in developing China’s fragmented package delivery industry through Cainiao. Reams of data on everything, from order trends to delivery routes and weather patterns to increase efficiency are crunched by Cainiao in partnership with delivery businesses.

Raising around 10 billion yuan ($1.53 billion) last month, Cainiao completed its first funding round. Singapore’s Temasek Holdings and GIC Pte Ltd, Malaysia’s Khazanah Nasional Bhd  and China’s Primavera Capital were among the  investors.

(Adapted from Reuters)