A group of 500.com investors have filed a class action lawsuit against the Chinese sports lottery company amid claims that it may have committed securities fraud in an attempt to bribe a prominent Japanese lawmaker.
Massachusetts law firm Block and Leviton LLC announced through an official press release on Thursday that it is to bring an action before the United States District Court for the District of New Jersey that could see shareholders in the betting company listed in New York compensated for their consequent losses.
Shenzhen-headquartered 500.com was reportedly interested in obtaining a licence to build and run an integrated casino resort on the Hokkaido or Okinawa Japanese Islands. To help smooth its course, the company is reported to have secretly paid bribes totalling up to 7.2 million yen ($65,370) to Tsukasa Akimoto, the nation’s Deputy Minister of Land, Housing, Transport and Tourism.
Block and Leviton LLC clarified that this plan was thrown into the public spotlight late last month when the Tokyo District Public Prosecutor’s Office arrested and charged Akimoto, a 48-year-old. This explained that this later also contributed to similar charges against 500.com advisors Katsunori Nakazato and Masahiko Konno as well as former company executive Zheng Xi.
To make matters worse, the year ended with Xudong Chen resigning as Chairman for 500.com while the Chief Executive Officer of the company, Zhengming Pan, soon announced that he would temporarily step down to conduct a comprehensive internal investigation into the whole affair.
As a result of all this, the law firm based in Boston argues that the share price at 500.com fell by 12 percent in just one day and that it now hopes to secure compensation for any of the out – of-pocket investors of the defendant.
Mark Delaney, an attorney at Block and Leviton Llp, used the press release to say 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 bought shares in the company between April 2018 and the end of last year.
“These allegations of corruption are very serious and our investigation will focus on whether illegal activity occurred that resulted in investor losses,” read the statement.