Does 500.com Ltd (WBAI) Have Accounting and Regulatory Problems?

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Famous Chinese gambling company 500.com Ltd (NYSE:WBAI) faced some licensing issues earlier this year. The legal and regulatory issues are still a problem for the company and effecting its stock in the market. Discussing 500.com Ltd (NYSE:WBAI) in a program on CNBC, Jason Moser, Senior Analyst at The Motley Fool, said that regulatory problems are becoming more common with Chinese companies. He thinks that 500.com Ltd (NYSE:WBAI) must follow the established accounting and regulatory norms in order to attract the customers. Moser said that accounting irregularities in 500.com Ltd (NYSE:WBAI) are keeping investors away from it.

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Moser said that if we look at the financial report of 500.com Ltd (NYSE:WBAI), it depicts material weaknesses in the accounting department and reporting sector of the company.

“[…] In order to be a publically traded company, here in the US, they have to apply to those GAAP standards, those generally accepted accounting principles, so they have something they have to show up there […],” said Moser.

Moser also talked about the dual class structure in 500.com Ltd (NYSE:WBAI) and said that this culture in the company concentrates the power in a few hands, which leads to the monopolization in the company. He said that this is another negative indicator that confuses him about the company.

In addition, Moser mentioned some of the opportunities for 500.com Ltd (NYSE:WBAI). He agreed that Chinese lottery markets are growing extremely well and 500.com can cease this opportunity to reinstate the trust of investors. He said that time is an important factor for the company and if the company shows some good quarters and consistency, investors will certainly get attracted to its stock. He said that there is another source of revenue in the pipeline for 500.com Ltd (NYSE:WBAI), which is general welfare lottery products.

Disclosure: None

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