Robbins LLP: 500.com Limited (WBAI) Misled Shareholders According to a Recently Filed Class Action
Robbins LLP announces that an investor of 500.com Limited (NYSE: WBAI) has filed a federal securities fraud class action complaint in the U.S. District Court for the Central District of California. The complaint alleges that the company and certain of its officers and directors violated the Securities Exchange Acts of 1933 and 1934 between November 22, 2013 and February 25, 2015.
500.com Misrepresents Its Business Practices
The complaint alleges that 500.com issued materially false and misleading statements to investors by failing to disclose that it did not have the necessary approval to conduct its online operations and that the company faced the risk of provincial sports lottery administration centers voluntarily suspending the acceptance of online purchase orders for lottery products.
500.com provides online sports lottery services in the Peoples Republic of China (“PRC”). Online lottery sales are illegal in the PRC without proper authorization. According to 500.com’s Registration Statement with the U.S. Securities and Exchange Commission, the company obtained “approval for online sales services for sports lottery products in order to recover and grow our user base and activity level.” 500.com continued to state that it was approved for online sales services for sports lottery products in multiple filings throughout 2014.
According to the complaint, multiple media sources revealed that the China Welfare Lottery Administration stated that it never authorized any website or agency to conduct online lottery services and ordered provincial agencies to conduct investigations into illegal online lottery services. On February 25, 2015, 500.com announced that four provincial sports lottery administration centers, which account for approximately 10% of the company’s total revenue, will suspend accepting online purchase orders in response to a notice issued by government authorities. Then, on March 2, 2015, after the complaint was filed, 500.com announced that “the remaining provincial sports lottery administration centers to which the company provides sport lottery sales services … plan to temporarily suspend accepting online purchase orders for lottery products.” The company expects transaction volume to decline sharply and likely “materially and adversely” affect the company’s financial results during this suspension period.
Since its November 22, 2013 IPO, American Depository Shares (“ADSs”) of 500.com have dropped 46%, from $20.00 to $10.77, as of March 3, 2015.
500.com Shareholders Have Legal Options
Concerned shareholders who would like more information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.