Ex-Aston Hill brass swept up in Amaya case
OSC alleges insider trading in gaming deal
Former senior executives at Aston Hill Financial Inc. are among those swept up in an insider tipping and trading probe involving online gambling firm Amaya Inc.
In a statement of allegations released Wednesday, staff of the Ontario Securities Commission allege Aston Hill’s former co-chief investment officer Ben Cheng became aware of undisclosed material facts about Amaya in April of 2014, and later informed John David Rothstein, then Aston Hill’s national sales manager.
Rothstein is attempting to settle the allegations. A hearing to consider the settlement is set for April 18 at 9 a. m. at the OSC’s headquarters in Toronto.
A third man, Frank Soave, who was then an investment adviser at CIBC Wood Gundy, is also accused of insider trading. He is no longer with the bank. None of the allegations have been proven.
The statement of allegations issued by OSC staff also accuses Cheng, Soave and Eric Tremblay, who was then chief executive of Aston Hill, of making “misleading statements” on material matters or omitting facts when examined under oath by staff of the OSC.
The r egulator alleges that Cheng learned about Amaya’s plans to buy the parent company of t he owner and operator of the PokerStars and Full Tilt Poker brands in a transaction valued at $ 4 billion in April of 2014 when Aston Hill was invited to participate in financing the deal.
At a subsequent meeting in June — before the deal was announced along with Amaya’s plan to issue new shares at $ 20, a 66- per- cent premium — OSC staff allege Cheng shared some or all of the information with Rothstein and “instructed, encouraged, and/or suggested to Rothstein to i nform others, who had lost money on certain other investments promoted by AHF ( Aston Hill).”
According to the statement of claim, “Rothstein understood that the purpose of providing them with the material, undisclosed information was to make up for these losses.”
Rothstein reached Soave by telephone on June 12 of 2014 and told him that Amaya “was about to an- nounce a major transaction that would be significantly positive for its share price,” and that he had learned this information from Cheng because Aston Hill was participating in the acquisition, according to the OSC.
The regulators allege that Soave bought 5,000 Amaya shares for $ 12.10 less than two hours before Amaya stock was halted at 12: 22 p. m., and then sent Rothstein a text stating “Wholy Shit” (sic).
The acquisition was announced at 9 p. m., and the shares opened the next morning at $19.05.
“Soave sold all his Amaya shares on June 13, 2014 at an average price of $ 19.78 per share for total proceeds of $98,921 (net of commission) — a profit of $38,166, or a return of approximately 63 per cent over one day,” the statement of allegations says. “Soave had never purchased Amaya shares before.”
The regulator alleged that Rothstein also traded in Amaya shares with knowledge of the undisclosed material facts.
The purchases of 700 shares in an account in trust for his children earned a profit of $ 5,507, or a return of about 66 per cent over two days.
Aston Hill c ombined operations with Front Street Capital last September. At the time, it was announced that Cheng would be taking a leave of absence, and ceasing involvement in the firm’s investment activities.
The founder of Montrealbased Amaya, David Baazov, is facing a trial later this year in Quebec on charges of insider trading. Regulators in Quebec, who laid the charges against Baazov in March of 2016, also allege he received kickbacks for stock tips.