AMAYA HIT HARD
Montreal-based online poker giant sees its stock fall by more than 21 per cent after CEO is charged following insider trading investigation,
MONTREAL— The CEO of Amaya has been charged following an investigation by Quebec’s stock market watchdog into insider trading related to a 2014 blockbuster acquisition that transformed the Montreal firm into the world’s largest online poker company.
David Baazov faces five charges, including influencing or attempting to influence the market price of the securities of Amaya and communicating privileged information.
“These allegations are false and I intend to vigorously contest these accusations,” Baazov said in a statement Wednesday.
“While I am deeply disappointed with the (Autorité des marchés financiers) decision, I am highly confident I will be found innocent of all charges.”
He was charged as part of an investigation by the AMF that resulted in 23 charges against three people — Baazov, Yoel Altman and Benjamin Ahdoot — and three companies: Diocles Capital Inc., Sababa Consulting Inc. and 2374879 Ontario Inc.
The charges stem from the alleged use of privileged information when trading of the company’s shares between December 2013 and the June 2014 announcement of a $4.9-billion (U.S.) deal to acquire the Oldford Group.
The accused have 30 days to plea to the charges. A trial led by AMF lawyers would be overseen by a Quebec Superior Court judge, said AMF spokesman Sylvain Théberge.
The penalty for insider trading is $5,000 to $5 million per charge plus up to five years in prison, Theberge added.
The AMF also announced it executed search warrants and obtained court orders to stop the activities of 13 additional people, including Baazov’s brother Josh, who traded in different securities while in possession of privileged information.
The13 people are alleged to have used their access to information to reap nearly $1.5 million in profit over five years starting in 2011, the AMF said.
It specifically mentions information about potential mergers and acquisitions involving Amaya Inc.
An independent administrative tribunal associated with the AMF also immediately suspended the certificate of one of the 13, insurance dealer and mutual fund broker John Chatzidakis. Théberge said the investigation is continuing. Amaya has long denied allegations of wrongdoing by the company, officers or directors and said the investigation wouldn’t have any impact on its operations, which include the PokerStars and Full Tilt online gambling websites.
It said an internal review supervised by independent board members with the assistance of external law firms found no evidence of any securities laws or regulations.
The company also said it has not been provided information upon which the AMF’s allegations are based.
“David Baazov has the full support of the independent members of the board,” Dave Gadhia, Amaya’s lead director and an member of the board, said in a news release.
Baazov said he is still committed to working with a group of investors to conclude a proposed takeover of the company that he announced last month.
A trading halt on Amaya shares was issued before the Toronto Stock Exchange opened Wednesday. Amaya shares closed on Tuesday at $18.57 (Canadian), giving it a market value of nearly $2.5 billion.
After trading resumed, Amaya’s stock plummeted, wiping out all gains since the PokerStars deal was announced.
The shares fell by more than 21 per cent to $14.64, amounting to a loss of more than $524 million in value.