Amaya CEO facing charges
Quebec securities regulator alleges Baazov engaged in insider trading
The Quebec securities regulator has filed insider-trading charges against the chief executive of Amaya Inc., stemming from an investigation that followed the online gambling company’s PokerStars acquisition.
David Baazov faces five charges of “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,” the Autorité des marchés financiers (AMF) said in a statement Wednesday.
Shares in Montreal-based Amaya were halted early Wednesday, but fell almost 20 per cent when trading resumed. They ended the day at $14.74, down $3.83 or 20.62 per cent. The stock has traded as high as $37.52 in the past year.
Global Maxfin Capital analyst Manish Grigo said although he’s not surprised by the stock’s initial downside he does not believe these charges affect the fundamentals of the company.
“Amaya has about 100 million poker players. They’re not going to stop playing because the CEO is under investigation,” Grigo said in an interview.
“PokerStars existed before Amaya bought it and PokerStars will still exist even if the management changes.”
Along with Baazov, Benjamin Ahdoot is facing four charges and Yoel Altman is facing six of trading while in possession of privileged information and influencing or attempting to influence the market price of Amaya shares.
Diocles Capital Inc. is facing five charges of trading while in possession of privileged information and influencing or attempting to influence the Amaya market price, while Sababa Consulting Inc. and a company called 2374879 Ontario Inc. are facing a total of three charges of trading while in possession of privileged information.
The AMF said it has executed search warrants and obtained cease trade orders for 13 individuals, who allegedly traded in differ- ent securities while in possession of privileged information. In all, they are alleged to have made a profit of close to $1.5 million between 2011 and 2016.
The AMF said the respondents are alleged to have used, between December 2013 and June 2014, privileged information pertaining to the securities of Amaya for trading purposes. As well, a few of the respondents are alleged to have conspired to commit some of the offences.
“We have made suppressing illegal insider trading and market manipulation a top priority, as this type of conduct profoundly affects public confidence and the integrity of our markets,” said AMF president and CEO Louis Morisset.
On Wednesday morning, Baazov issued a statement denying that he unlawfully provided non-public information to third parties ahead of Amaya’s $4.9-billion takeover of PokerStars’ owner Rational Group in 2014.
“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.”
Baazov said he still plans to go ahead with leading a proposed bid to take Amaya private in a $21-pershare, all-cash offer.
Based on Amaya’s basic shares outstanding as of Sept. 30, the proposal had valued the company at about $2.8 billion, or $2.14 billion based on the current exchange rate.
Amaya’s board and management said it believes the charges are “without merit” and expects Baazov will be fully exonerated.