Amaya Probe by US Authorities Targets Possible Insider Trading

February 12th, 2015 | by Kaycee James

Amaya is now under investigation by US-based FINRA over those who made significant profits during the run-up to the PokerStars and the Rational Group acquisition. Stock shot up nearly 14 percent on one day alone, three weeks before the announcement of the deal. (Image: thecanadianencyclopedia.ca)

Amaya Gaming is being investigated by the US-based Financial Industry Regulatory Authority (FINRA) regarding its rocketing stock price prior to the announcement of its $4.9 billion acquisition of PokerStars and the Rational Group last June.

FINRA, a Congressionally authorized, non-profit organization tasked with protecting US investors by keeping a watchful eye on the securities industry, has said it is focusing on around 300 early Amaya investors who were able to make substantial profits by buying shares in the run-up to the acquisition.

These include “many prominent Canadian brokers, money managers, hedge funds and business executives,” reports The Globe and Mail, and FINRA is looking into whether any of these traders had insider links to Amaya.

Amaya’s rapid rise in stock in the weeks prior to the announcement certainly suggested something was going on behind the scenes, and rumors of the deal were reported in the gambling press a full three weeks before it was publicly made official.

Stock shot up by nearly 14 percent in one day alone; the Friday before the rumors were first publicized in the media. In fact, between the release of its Q1 financial report and the day of the announcement, the price almost doubled.

Offices Raided in December

Amaya was forced to release a statement at that time playing down, but not denying, the rumors.

“Strategic acquisitions have been and are one component of the company’s growth strategy and … from time to time, this process leads to discussions with potential acquisition targets,” the company said.

“There can be no assurance that any such discussions will ultimately lead to a transaction. As a general policy, Amaya does not publicly comment on potential acquisitions unless and until a binding legal agreement has been signed. The company intends to make no further comment or release regarding current market rumors unless and until such comment is warranted.”

Amaya’s Canadian offices were raided by police and provincial financial market regulators AMF in early December as part of a similar investigation into the same trading activity.

Authorities reportedly also showed up at Canadian investment bank Canaccord Genuity, as well as Canadian insurance firm Manulife Financial, as part of the same investigation. News of the December raid briefly sent Amaya’s stock tumbling.

Amaya Claims No Knowledge of FINRA Probe

Meanwhile, Amaya told The Globe and Mail newspaper this week that it was unaware of the FINRA investigation but is cooperating fully with the AMF.

Speaking about the latter investigation, Amaya CEO David Baazov recently told OnlinePokerReport: “I would say that the investigation for us is something that we anticipated given that there was a historical stock run-up in advance. I think the AMF is looking into something that they should be looking into and looking into what has led to that stock run-up.

“We have no evidence to believe that there’s any wrongdoing by any officer, director, or employees and we’re cooperating with the investigation.”