A group of investors in 500.com have filed a class-action lawsuit against the Chinese sports lottery firm following the emergence of allegations that it may have committed securities fraud in attempting to bribe a prominent Japanese legislator.
Massachusetts law firm Block and Leviton LLC revealed via an official Thursday press release that it is to lead an action before the United States District Court for the District of New Jersey that could see shareholders in the New York-listed betting firm compensated for their consequent losses.
Shenzhen-headquartered 500.com was purportedly interested in being granted a license to build and operate an integrated casino resort on the Japanese islands of Hokkaido or Okinawa. To help smooth its path, the firm is alleged to have secretly paid bribes totalling up to ¥7.2 million ($65,370) to the nation’s Deputy Minister for the Ministry of Land, Infrastructure, Transport and Tourism, Tsukasa Akimoto.
However, Block and Leviton LLC explained that this scheme was thrust into the public spotlight late last month when 48-year-old Akimoto was arrested and charged by the Tokyo District Public Prosecutor’s Office. It detailed that this subsequently also led to the similar indictments of 500.com advisors Katsunori Nakazato and Masahiko Konno as well as previous company executive Zheng Xi.
To make matters even worse, the year ended with Xudong Chen resigning as Chairman for 500.com while the enterprise’s Chief Executive Officer, Zhengming Pan, soon announced that he would be temporarily stepping down so that a thorough internal investigation into the whole matter could be conducted.
As a result of all this, the Boston-based law firm contends that the price of shares in 500.com decreased by 12% in only one day and that it is now hoping to secure compensation for any of the defendant’s out-of-pocket investors.
Mark Delaney, an attorney at Block and Leviton LLC, used the press release to claim that that 500.com had ‘concealed from investors that its executives were bribing Japanese lawmakers’ and that he is now interested in hearing from anyone who purchased shares in the firm between April of 2018 and the end of last year.
Read a statement from Delaney…
“These allegations of corruption are very serious and our investigation will focus on whether illegal activity occurred that resulted in investor losses.”