On Wednesday, the offices of the Montreal-based Amaya Gaming, the owners of PokerStars, Full Tilt Poker and other gaming entities, were raided by Canadian authorities over allegations of insider trading.
According to Nathan Vardi of Forbes.com on Thursday evening, the raid was conducted involving Amaya and two financial firms, the Canadian investment bank Canaccord Genuity and Canadian insurance firm Manulife Financial. Law enforcement officials from the Royal Canadian Mounted Police (RCMP) and the Autorite des Marches Financiers (translated as the Authority of Financial Markets) instituted the raid late in the afternoon but would not say what it was regarding. “Yesterday’s operation is part of an AMF investigation on that company,” Sylvain Theberge, a spokesman for the AMF said. “I can’t go further at this moment.”
Eric Hollreiser, long known as a spokesman for PokerStars and now for Amaya, added after the raid was complete, “Amaya is cooperating in an investigation by the AMF…it is not appropriate for us to provide any further details at this time.” The two financial institutions also stated that they were cooperating with the investigation but added no further comments of their own.
While the players involved are very tight-lipped over the raid by Canadian authorities, the involvement of Canadian financial regulators points out the obvious reason for the investigation. Amaya Gaming, which was trading at $5.81 as recently as April of this year, saw its stock price on the Toronto Stock Exchange rocket upwards when the company was entertaining the possibility of purchasing the PokerStars conglomerate. Once that $4.9 billion sale was completed this summer, Amaya saw its stock price reach $38.65 per share just last month, an increase of more than six times what its price was in the first quarter of the year.
Canadian authorities are especially keying in on the period between April and June prior to the announcement of the sale between Amaya and the Rational Group, the former owners of PokerStars. In that time frame alone, Amaya’s stock price more than tripled to almost $20 per share. Those actions, in the eyes of the Canadian authorities, might be indicative of “insider trading” (using private information about a company for financial gain), a significant charge that requires the investigation by law enforcement.
Due to Amaya’s ownership of PokerStars, the poker community immediately sounded off regarding the Canadian raid. On the Two Plus Two forums, speculation regarding the potential for insider trading led the commentary in a lengthy thread. Other potential reasons offered by some of the posters included manipulation of their finances in the time prior to the purchase of PokerStars to make Amaya look better for the transaction.
Poster ‘Sect7G’ opined that the reason for the raid may be more ominous. “The RCMP are sort of the equivalent to the Department of Justice (DoJ) in the United States,” ‘Sect7G’ stated. “They don’t raid offices unless they are very confident with what they expect to find…there’s a 95% chance that something is not right with Amaya. There’s a strong possibility that they are guilty of something and the punishment will range from a stiff fine to something far more serious.”
Surprisingly, some of the Two Plus Two posters were cheering for the downfall of Amaya over this investigation. One poster commented that “this was the highlight of my day…let’s see that Amaya stock hit rock bottom.” Another poster went further in saying, “Hopefully those scumbags lose every penny.”
The investigation by Canadian authorities is already having an effect on Amaya’s stock prices. After closing yesterday at $35.06, the stock was priced at $27.50 for the opening bell on Friday. As of press time, Amaya Gaming stock sits at $30.35.
