YahooWhen trading resumes in the U.S. on Tuesday, Yahoo (YHOO) investors may want to brace for a potential Alibaba (ALBCF) affect. That's because the road to an initial public offering for Chinese e-commerce giant Alibaba's sister company, Taobao, may have just gotten even longer.

Yahoo, which holds roughly a 40% stake in the Chinese companies' parent, Alibaba Group Holdings, has been pining for a Taobao IPO to make its lucrative investment stake in Alibaba Group even more valuable. But on Monday, Alibaba announced that CEO David Wei and Chief Operating Officer Elvis Lee had resigned following preliminary results of a fraud investigation at the company.

Taobao CEO Jonathan Lu was named CEO of Alibaba and is now tasked with overseeing both Internet sites, a move that could potentially push back any plans for a Taobao IPO even further down the line. On Monday, John Spelich, an Alibaba spokesman reiterated: "We have no intention for Taobao to become a publicly traded company."

Up to Half of Yahoo's Value

On Jan. 26, press reports surfaced that Alibaba Group was planning to postpone IPOs of its eBay-like consumer-auction site Taobao and PayPal-like online payment site Alipay, according to a Bloomberg report. That day, Yahoo's stock fell 2.8% to $15.57 a share, while the broader markets advanced. Alibaba Group, combined with Yahoo's other Asian investments, like Yahoo Japan, account for upwards of 50% of the U.S. portal's value, say some Wall Street analysts.

Alibaba's board asked Lu to serve the dual CEO roles and has not initiated a CEO search. Lu's exposure to running publicly traded Alibaba could be a good thing if Taobao goes public one day.

Meanwhile, concerns that Lu may be stretched too thin to be effective in either role should be offset because both companies have strong leaders and a deep bench of talent, Spelich says. "Jonathan will have all the resources he needs available to him," Spelich says. Alibaba's board will monitor Lu's progress in managing both companies.

Fraudulent Storefronts

For Internet darling Alibaba, the revelations of fraud present a black mark, which it's quickly addressing. While neither Wei, Lee or other senior executives were found to be directly involved in the fraud, Alibaba says the top two executives resigned to show that they nonetheless take responsibility and that such acts won't be tolerated.

The internal investigation revealed approximately 100 sales representatives, managers and supervisors were either intentionally or negligently allowing fraudulent storefronts to appear on its international marketplace, rather than submitting them to its authentication and verification system. Those employees accounted for roughly 2% of Alibaba's overall workforce.

Between late 2009 through 2010, a total of 2,326 Alibaba China Gold Suppliers were found to have committed fraud when selling goods to users. That represented 1.9% of the company's total Gold Suppliers over the course of two years.

Alibaba says the average claim per buyer came out to less than $1,200 and that the fraudulent actions won't have a material effect on its financial results. As for any future fallout, like loss of business, Spelich says the company hopes its actions to address the fraud will underscore its values and ethics.

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Major Fraud Alert

The entire Federal Banking System under FirstGov has been "Consumed" and "Levied" by way of a Maryland State Circuit/District Court Ruled “Appropriation and Garnishment” of all Future Earnings prior to and after 2004 against Bank Of America by way of the F.D.I.C. Regulations Prohibiting failing Banks from Merging with other failing Banks between the Dates of 08/04/08 and 10/09/09.

Bank of America violated the 21st Century Act: Final Amendments to Regulation CC Section:

seeking reimbursement of Credit, Loan, and Finance Balances as a "Bank Entity" and not a "Nonbank Consumer" as specified on Pages 85 and 86.

The person they sued through a LLC. Debt Collection Company and Law Firm was the "World Fortune Owner" who "Counterclaimed" and won.

Now all Contracts of any Corporations (Including Employment) under the "Controlling Interest" of any Investment Bank Worldwide are "Null and Void", and are also under the stipulated Rules and Regulations of an "Closely-held S Corporation rendering all Employed under Legal Actions against “Domination”, and also means that "No Corporation can hold Shares" officially making every Stock Exchange on the Planet a "Ponzi Scheme" by default.

Businesses owned by the States (Public Corporations) are being sold Stock Shares by Corporations also under the Federal Banking System in this Worldwide "Ponzi Scheme". The World Fortune Company Merrick Inc. Sweden is dissolving Millions and Billions of Dollars from "All Levels of Government"in the U.S. of Financing based upon Years of "negligent inaction" involving this case.

The Federal Government has already been forced to discontinue supplying the Financing States use to pay their debts, Persons in Government Offices may want to begin to take their jobs more seriously, these are different times from 10 Years ago and you will not be accepted civil servants here just because you say you are here to do the right thing.

May 29 2011 at 1:13 AM Report abuse rate up rate down Reply

There is no excuse for the blatant, rampant fraud that has been an underlying element on Alibaba for its entire 11 year existence.

In fact, The level of counterfeiting, piracy and fraud became so bad a few years ago that Alibaba was a center of discussion at a the Congressional “SUBCOMMITTEE ON COMMERCE, TRADE, AND CONSUMER PROTECTION,” located here:

Here is an excerpt from the Congressional Record:
“The Hangzhou-based Alibaba website ( is a virtual
market where major players in the underground counterfeiting network
connect and trade. While some authentic goods are traded on Alibaba,
counterfeiters are in evidence all over this website, in both English
and Chinese language renditions.
On Alibaba, many sellers are explicitly seeking worldwide
distributors for their counterfeit goods, including software,
prescription drugs, golf clubs, apparel, and even batteries. Below is
an actual Alibaba screen offering large lots of counterfeit Duracell
batteries, claiming they were produced using ``good materials'' and
promising ``value for money''.
Counterfeit exchanges like Alibaba will undoubtedly harm China's
consumers and impair the future of legitimate e-Commerce there. But
Alibaba can also drag other economies down with it, by injecting
wholesale quantities of counterfeit goods into the worldwide supply

See my other post for a brief teaser about the new ONLINE MARKETPLACE that I've created, which is in need of accredited investors...(hint hint)

February 21 2011 at 11:24 PM Report abuse +1 rate up rate down Reply

I’m happy to report that Alibaba will soon exceed its useful existence. You’ll soon have a far more powerful, far safer option. (Accredited investors needed)

I’m the inventor of an exciting new online marketplace website and business model - fundamentally similar to Alibaba in some ways – but serving both businesses and consumers that are looking to buy products or services. Think of it as a virtual selling “machine.” It’s important to differentiate that this is an AMERICAN company-- not explicitly focused on getting China goods into the US like Alibaba is. This new global online marketplace will effectively prevent the fraud, IP piracy, counterfeiting, patent and trademark infringement and other forms of system abuse historically existing on Alibaba.

This new site is so powerful that by querying a part number, UPC code or product name, you can instantly cut through hundreds of thousands of search results typically returned by your favorite search engine - and instead - receive a detailed profile of that product including all important specifications, facts, reviews and images. Take that a step further if you will, and imagine being able to enter say, your ZIP code, to be given a list of all the stores near you (or online) that carry that product. This includes all levels of sellers from manufacturers to the end retailer-- for those looking to buy one product or those looking to buy a sea container full of product. Consider the possibilities. Never again will you have to search through the categorized “dumping grounds” that exist on Alibaba to find products to buy and sell.

Imagine a website and database so powerful and so detailed that you can eliminate hours of procurement phone calls and searches daily. Need a product with specific features or attributes? Soon you’ll be able to go to any category on this system – such as women’s tops – and be able to refine your search results by category-specific attributes such as size, color, sleeve length, buttons or zippers, pockets, collar style, texture, material, where it’s made, laundering restrictions, etc.

Apply that level of functionality to any product you make, or any product you can ever think of buying and then think about how much time you will save. For business owners-- consider how many pre-qualified sales leads and 24-hour worldwide exposure you'll acquire as part of the most productive marketing platform ever created- allowing all of the purchase-intent buyers in the world to find your business or products in 2 minutes or less! How does that redefine the meaning of "leverage?"

The site and business model are fully designed but we need accredited investors before it can come to life on a computer screen near you. Interested in being a part of the solution? Get in touch soon.

February 21 2011 at 11:21 PM Report abuse +1 rate up rate down Reply
Wow! This site:
Both cheaper and fashion, and good products.
Purchase will have small gift to send. was a good site.
Like this discovery.

February 21 2011 at 8:56 PM Report abuse rate up rate down Reply