David Baazov, the president, CEO, and board chairman of Amaya Inc., the parent company of PokerStars, has charged by Quebec’s Autorité des marchés financiers (the “AMF”) with five securities fraud charges related to Amaya’s acquisition of PokerStars parent company, Rational Group, in June 2014.
The AMF began its investigation in late 2014, an investigation which included a raid with the Royal Canadian Mounted Police (RCMP) of Amaya’s Montreal offices as well as the offices Canadian insurance company Manulife Financial and investment bank Canaccord Genuity, companies that were involved in the acquisition.
The trigger for the investigation and today’s charges was a surprising run by Amaya’s stock prior to the June 12th announcement of the Rational acquisition. A week earlier, on June 5th, Amaya’s stock closed at $10.12. The next day, it closed more than a dollar higher at $11.17. It stalled for a few days, but then jumped to $12.02 on June 11th.
May was good to Amaya’s share price, as well. On May 14th, it closed at $7.29; less than two weeks later, it peaked just above $11.
And now, after a lengthy investigation, the AMF feels it has enough evidence to charge Baazov and others with insider trading. Specifically, the AMF stated in a press release that Baazov is being hit with five charges, including “aiding with trades while in possession of privileged information, influencing or attempting to influence the market price of the securities of Amaya inc., and communicating privileged information.”
He’s not the only one. Amaya’s Vice President of Government Projects, Benjamin Ahdoot, faces four charges. Pinetree Capital Senior Analyst Yoel Altman is looking at six. Diocles Capital Inc. was charged with five counts, while Sababa Consulting Inc. and the very clearly named 2374879 Ontario Inc. are both facing three charges. All charges are similar to those levied at Baazov.
“Based on the AMF’s investigation, the respondents are alleged in particular to have used, between December 2013 and June 2014, privileged information pertaining to the securities of Amaya inc. for trading purposes. As well, a few of the respondents are alleged to have conspired to commit some of the offences,” the press release reads.
David Baazov released a statement, which reads, in part:
These allegations are false and I intend to vigorously contest these accusations. While I am deeply disappointed with the AMF’s decision, I am highly confident I will be found innocent of all charges.
I have always been proud of my reputation for personal integrity and ethical business conduct. As the founder, President and CEO of Amaya, I want to provide my personal assurance to all our of stakeholders, including our employees in Canada, the US, and Europe, our more than 100 million playing members, vendors, and our public security holders that I am as confident as ever in Amaya’s business operations and future prospects.
Amaya also responded, issuing its own press release. The company says that it supports Baazov adding that Amaya should be just fine as the legal process plays out:
Amaya does not anticipate the charges will have any impact on the management or day-to-day affairs of the operating business. Operations continue as usual and there will be no change to the PokerStars or Full Tilt product offerings, either in customer experience, player fund security or game integrity. Amaya will continue to communicate with its regulators and does not currently anticipate any material negative impact on its current or potential licenses, approvals or partnerships as a result of the allegations against Mr. Baazov.