Chinese sports lottery operator 500.com limited issued a corporate statement on the sale of company shares by one of its Directors Qi Li under the ‘pseudonyms’ Lionel Rim and John Richard.
The operator issued the statement to address concerns reported by investment research firm Muddy Waters, who tweeted on the validity of the share sales conducted by Qi Li. The Muddy Water tweets revealing Qi Li’s sales ‘pseudonyms’ Lionel Rim and John Richard had caused public concern regarding corporate integrity and ethics by 500.com (whose stock market ticker is WBAI) governance.
$WBAI director Qi Li’s 144 sale pseudonyms include “Lionel Rim” and “John Richard”. Nothing strange here…
— MuddyWatersResearch (@muddywatersre) November 6, 2014
On 7 November 500.com limited issued the following corporate statement:
“500.com is aware and had pre-approved of the sale by Mr. Li of the Company’s shares held through Lionel Rim and John Richard, which are both limited liability companies incorporated by Mr. Li under the laws of the Cayman Islands on August 11, 2011. The Company was informed by Mr. Li that the referenced sales would be executed by an independent brokerage firm pursuant to a Rule 10b5-1 plan implemented by Mr. Li in September 2014. Pursuant to the relevant Form 144 filings, the aggregate number of ADSs Lionel Rim and John Richard registered to sell was approximately 1.0 million, instead of 1.3 million as claimed. Mr. Li continues to be a shareholder.
“500.com is committed to providing full and accurate disclosures to investors and to vigorously rebutting any allegations or speculation that attempt to negatively impact the Company’s public image and valuation.”
The Chinese operator hit financials headlines last week when Bloomberg News reported market concerns regarding its operating viability to offer sports betting and lottery services in China.
Bloomberg News reported that hedge fund Prime Capital Management Co. had scaled back its investment in the Chinese operator from $93m to $27 million, decrease its stake in 500.com from 16% to less than 5%.
In its last three months of trading 500.com governance have had to tackle numerous concerns regarding the company’s legal and regulatory requirements for operating betting/gambling services in China, and accusations of inadequate accounting practices by US business analysts.