The Federal Trade Commission is investigating Shein Group’s U.S. business operations, the Singapore-based fast-fashion retailer disclosed in a filing related to its planned initial public offering in Hong Kong. Shein did not disclose what the FTC is investigating or when the probe began, according to the filing.
An FTC spokesperson confirmed the investigation but declined to provide further comment. Shein did not immediately respond to a request for comment from The Wall Street Journal.
In the filing, Shein said it is cooperating with the FTC’s investigation. The company said there is a possibility it could reach a settlement with the FTC that could require it to make “significant monetary payments that could have a material adverse effect on our financial condition.”
Shein added that it cannot predict the outcome of the investigation or its timing. “We cannot rule out that such outcome could occur in the near term,” the company said.
The disclosure was included in filings with the Hong Kong stock exchange as Shein prepares to go public after securing China’s approval for a listing earlier this year, the company said. Shein had previously targeted an IPO in the United States, but its plan fell apart amid U.S. scrutiny of its supply chain and labor practices in China. The company had also pursued a listing in London.
Shein has also been the subject of an investigation by the European Union over concerns about illegal products sold online and potential risks to users from the platform’s design.