Alibaba (BABA)  has been on an incredible run with revenue growing between 44% and 56% year-over-year for the past five quarters -- so incredible that some say it might be too good. 

The dominant Chinese e-commerce player first announced an ongoing investigation by the Securities and Exchange Commission into its accounting practices in May 2016. While Alibaba reported 56% year-over-year growth to $7.4 billion for its latest quarter, U.S. e-commerce giant Amazon.com (AMZN) reported 25% revenue growth to $38 billion for its past quarter. The two companies are catering to different-sized populations and have different overall business models, but the contrast is still striking. 

Georgia Tech accounting professor Charles Mulford said that an SEC investigation can be limited or far reaching, but the fact that it's still ongoing suggests that the SEC is looking at Alibaba's accounting very closely. He noted that it's probably a complicated investigation since the SEC has to get access to data on a company that's based in China but trades on the NYSE. "The bottom line is you'd rather not have an SEC investigation," he said. "It's definitely a negative." 

If the SEC finds something wrong with Alibaba's accounting practices, the company probably won't have to pay a heavy fine, but it will have to issue a restatement of its numbers and its stock might take a hit. "Revising numbers makes investors less confident and secure with a company," Mulford said.

The last update to the investigation came in November 2016 when Alibaba denied reports that a top executive at the company was working with federal regulators on it, as the New York Post first reported. "We don't think there is any factual basis to the New York Post story," Alibaba executive vice chairman Joe Tsai said during an earnings call. "So on that score, when we have real news, we will update everyone."

Tigress Financial Partners CIO Ivan Feinseth said he wasn't overly concerned about the investigation, believing it to be mostly due to the SEC's unfamiliarity with Alibaba's business model since it's a Chinese company. Deutsche Bank and other firms had similar viewpoints after the investigation was first announced in 2016. "While we would never be dismissive of an SEC inquiry, we believe that investigations are sometimes launched because the SEC is unfamiliar with various constructs (e.g.,- Cainiao's unique business model, the unprecedented scale of Singles Day, etc.)," Deutsche wrote.

Alibaba said the investigation was in relation to the accounting for logistic firm Cainiao Network, which Alibaba has a 48% stake in, operating data from its annual "Singles' Day" sales extravaganza, as well as the accounting of related-party transactions. The SEC declined to comment for this story. Alibaba also declined to comment past its previous statements on the investigation that it was cooperating with the SEC, that its annual reports were adequate, and that an investigation doesn't mean that the company has broken any U.S. laws. 

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