The Quebec securities regulator has hit the CEO of Amaya David Baazov, with insider trading charges.
The Quebec Autorité des Marchés Financiers (AMF) charged Baazov and other individuals with 23 different charges, including five personal charges to Baazov.
According to AMF the charges are related to the financial trading that occurred before the purchase of the Oldford Group (parent company of Rational Group, Owner of Full Tilt and PokerStars) was completed in June 2014.
After the announcement of the deal, worth $4,9 billion supported by GSO Capital Partners and also Macquarie Capital, Barclays and Deutsche Bank, the shares of Amaya increased by 42 percent.
Abuse of Privileges
Six months after the deal, the AMF started investigating claims regarding the abuse of privileged information by certain parties for own financial gain. The main issue that concerned the AMF was the fact that share prices were unfairly affected to benefit certain people.
In December 2014 the Quebec securities regulator and the Canadian police did a raid at Amaya’s headquarters in Montreal. At the time, Amaya released a statement saying that the company was cooperating fully and that the company was not involved in any misconduct.
Fifteen months later, the AMF is pressing charges against Baazov and two former advisers, Benjamin Ahdoot and Yoel Altman, as well as three other companies.
The three men are accused of “trading while in possession of privileged information” to influence Amaya’s securities market price.
Additionally, the companies 2374879 Ontario, Diocles Capital Inc. and Sababa Consulting Inc. are also charged with similar offenses.
Baazov Affirms His Innocence
Today in response to the news, Amaya said in a press release that the company is not directly accused of any misconduct and that other directors and subsidiaries have not being accused of misconduct as well.
This press release shows Amaya’s effort of trying the put some distance between the allegations and the company, in the same statement the company also highlighted that Altman and Ahdoot are former advisers – as opposed to current advisers – of the company.
In a statement Baavoz denies all five allegations against him:
“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.”
It is actually quite rare instances of the AMF bringing charges against a company or a person. According to the Financial Post in 2013 only 3% of AMF’s caseload was related to insider trading, mainly because due to its “circumstantial” nature, prosecution rates were low.
This could mean that AMF is confident of both being able to back up the claims with hard evidence and also securing prosecutions against the accused.
Could this Affect PokerStars New Jersey?
This could affect PokerStars greatly.
Before securing a license to operate again in the U.S. Amaya had to release four former executives, Israel Rosenthal, Serge Bourenkov, Charles Fabian and CFO Micheal Hazel, because they were part of PokerStars’ old regime, which operated illegally in the U.S.
Because of this, one of the licensing conditions made by the New Jersey Division of Gaming Enforcement (DGE) was the termination of their contracts.
Even though the charges are from a Canadian authority, there is a chance this issue could lead to a review of PokerStars’ license in New Jersey.
However before anything of this nature can be done, all current changes will have to be properly reviewed, of course.