Outlaws around 500 groups (5)
I believe the answer is:
bands
'groups' is the definition.
(band is a kind of group)
'outlaws around 500' is the wordplay.
'outlaws' becomes 'bans' (banning is a kind of outlawing).
'around' is an insertion indicator.
'500' becomes 'd' ('d' can be a synonym of '500').
'bans' placed around 'd' is 'BANDS'.
(Other definitions for bands that I've seen before include "Musical groups" , "Groups playing popular music" , "Pop groups" , "Gangs" .)