Insider Trading Charges Aimed at Amaya CEO David Baazov by Quebec Regulators

David Baazov is one of three individuals being accused of trading misconduct by financial authorities in Quebec relating to the Amaya acquisition of PokerStars and Full Tilt Poker in 2014. (Image: casinoconnectionac.com)

Insider trading charges are serious business, and today is probably not the best day ever for Canadian gaming company Amaya’s CEO David Baazov.

In the same week that Amaya launched its US PokerStars client in the now legal and regulated New Jersey market, Baazov stands accused of some decidedly illegal and unregulated business practices surrounding his buyout of PokerStars super parent, the Oldford Group, in 2014.

Baazov has been charged by Quebec’s Autorité des Marchés Financiers (AMF), the province’s financial regulatory authority, of trading misconduct leading up to his company’s $4.9 billion acquisition of PokerStars and Full Tilt.

According to an AMF release, Baazov is facing five charges including “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 35-year-old founded the Canadian gaming company in 2004, and focused primarily on business-to-business services until 2014. Shares of his publicly traded company skyrocketed leading up to its buyout of the Rational Group, a subsidiary of Oldford and parent to the two dominant online poker networks.

Along with Baazov, the AMF investigation also named Benjamin Ahdoot, Yoel Altman, and businesses Diocles Capital, Sababa Consulting, and 2374879 Ontario Inc. The financial regulators have levied a total of 23 charges on the accused.

Fighting Back

As the top dog at the multibillion-dollar international conglomerate that is one of the world’s most powerful Internet gambling operators, Baazov wasted no time in calling what he hopes is just a bad read by the AMF.

“These allegations are false and I intend to vigorously contest these accusations,” Baazov said through a statement released by his public relations firm. “While I am deeply disappointed with the AMF’s decision, I am highly confident I will be found innocent of all charges.”

The AMF first began investigating Amaya’s PokerStars and Full Tilt purchase back in December of 2014.

Leading up to the acquisition, Amaya shares on the Toronto Stock Exchange soared some 340 percent. The stock was trading at less than CDN$7 (US$5.30) in April of that year, but rapidly climbed to over $15 ahead of the June 12 announcement.

Skepticism soon followed the rising stock, prompting a formal investigation by the AMF.

“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,” AMF President Louis Morisset said at the time.

Business as Usual, They Hope

Amaya commented on the investigation Wednesday morning and said Baazov has its full support.

“As noted earlier, Amaya conducted an extensive internal review . . . This review found no evidence of any violations of Canadian securities laws or regulations,” Amaya Lead Director Dave Gadhia explained.

The company also claimed that the charges won’t impact its day-to-day operations moving forward, saying there will be no service interruptions or changes to the customer experience during the investigation.

That might not necessarily be up to Amaya, especially in New Jersey.

The AMF charges couldn’t come at a worse time for the company, as PokerStars just launched this week in the Garden State, its first return to the US gaming market since federal authorities seized the domain in 2011.

As part of its licensing approval, regulators in New Jersey forced Amaya to sever ties with four individuals that were known to continue operating online gambling networks after the passage of the Unlawful Internet Gambling Enforcement Act (UIGEA) in 2006 and up until poker’s Black Friday five years later.

It’s the latest black eye on PokerStars, and today’s news surely will have all the eyes of gaming regulators in New Jersey on it as well.

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