The securities regulator of Quebec said it was filing insider trading charges against the CEO of the online gaming giant Amaya, David Baazov. He is accused of influencing Amaya’s stock price and aiding trades ahead of its June 2014 takeover of the world’s largest online poker website, Pokerstars. Baazov, who is also Amaya’s largest individual shareholder, denied the charges and the company board said it was backing him.
Suspicions were aroused when hundreds of investors bet heavily on Amaya’s stock ahead of its US$4.9 billion takeover of Pokerstars. At the time it was a minor online gambling company, struggling with losses, debts and a slumping stock price. Yet in spite of this its shares more than doubled in price ahead of the acquisition, which was paid for in stocks and cash. Pokerstars had two years earlier bought its main competitor Full Tilt Poker. Through its subsequent takeover, Amaya became the biggest online gambling company in the world.
The regulator, Autorite des marches financiers (AMF), said it was alerted by two whistleblowers before it raided Amaya’s offices in December 2014. Along with Baazov, it has also charged Amaya manager Benjamin Ahdoot and a Toronto business associate Yoel Altman with insider trading and improper influencing of a stock price. The AMF also announced it had executed search warrants and obtained cease trade orders against 13 other individuals connected to mergers and acquisitions involving Amaya.
Pokerstars, which is based in the Isle of Man, recently managed to launch in New Jersey, a state where online gambling is regulated. The operator had been trying to re-enter the US since 2011, when federal prosecutors shut down its operations there, alleging it was violating federal bank fraud and money laundering laws.
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