China Says Alibaba Investment Service May Face Penalties

China on Friday said a new Alibaba Group Holding Ltd. investment service didn’t comply with regulations, illustrating the challenge the e-commerce giant and other Chinese technology firms face as they expand into new businesses.

The decision was disclosed the same day that the Communist Party’s main mouthpiece published an interview with Alibaba Chairman Jack Ma in which he said China’s financial regulators were “excessive.” While it wasn’t clear whether the two were linked, it offered a reminder that Alibaba will be under a public and official spotlight ahead of an expected initial public offering.

China’s securities regulator said Friday that a new Alibaba service that enables Internet users to invest in a money-market fund online wasn’t in full compliance with the country’s regulations. The service, which was introduced by Alibaba’s online-payment affiliate Alipay last week, allows users with money stored online to invest in a fund pegged to corporate debt and government bonds. It attracted more than one million users as of Friday, according to the company.

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