Amaya CEO Baazov charged with insider trading over Rational Group purchase

amaya-ceo-baazov-insider-trading-chargesShares in Canada’s Amaya Gaming plunged by more than one-fifth on Wednesday morning after securities regulators charged CEO David Baazov (pictured) with insider trading.

Early Wednesday, Autorité des marchés financiers (AMF), the stock watchdog in Amaya’s home province of Quebec, filed a total of 23 charges against Baazov, Amaya staffer Benjamin Ahdoot and Yoel Altman, a close friend of Baazov who formerly served as a financial advisor to the firm.

The charges stem from an AMF investigation into the surge in Amaya’s share price ahead of the company’s 2014 $4.9b acquisition of the Rational Group, the parent company of PokerStars and Full Tilt, which overnight turned Amaya into the world’s top online gambling company.

Baazov’s charges include aiding with trades while in possession of privileged information, influencing or attempting to influence Amaya’s market price and communicating privileged information.

Ahdoot and Altman have been charged with trading while in possession of privileged information and influencing or attempting to influence Amaya’s share price. The AMF has also levied charges against several companies, including Diocles Capital inc,, Sababa Consulting inc. and 2374879 Ontario inc.

The AMF release announcing the charges said the accused had traded Amaya shares using privileged information between December 2013 and June 2014, the month the Rational Group acquisition was announced.

The AMF noted that some of the accused “conspired to commit some of the offences” while warning that convicted offenders are “liable to stiff fines as well as prison terms.”

Originally focused on a group of Manulife Securities brokers, the probe expanded to include Baazov and CFO Daniel Sebag, the company’s two top execs. Throughout, Baazov proclaimed his innocence and that hasn’t changed despite Wednesday’s charges.

Baazov issued a statement saying he intended to “vigorously contest” the AMF’s “false” allegations and was “highly confident” of prevailing in court. Despite the brouhaha, Baazov said he was “still committed” to pursuing his previously announced plans to take the company private.

Amaya’s board issued its own statement, with lead director Dave Gadhhia saying an external review had found “no evidence of any violations of Canadian securities laws or regulations” and that the board had not been provided with “any new information upon which the AMF’s allegations of infractions are based.” The company insists the kerfuffle won’t have any impact on its day-to-day activities.

The AMF separately announced that it had executed search warrants and issued freeze and cease trade orders on 13 other individuals connected with the case. The unlucky 13 are alleged to have improperly earned C$1.5m in profits between 2011 and 2016 by communicating privileged information regarding Amaya acquisitions.

The 13 names include Baazov’s older brother Josh aka Ofer Baazov and Craig Levett. Josh/Ofer and Levett were allegedly former partners in online sportsbook BetonUSA prior to Amaya’s formation.

A 2015 Globe & Mail article linked both the elder Baazov and Levett to a Quebec company that eventually morphed into Amaya. The article also claimed that Josh was representing himself as an Amaya exec in business meetings as late as March 2011.

Amaya told the G&M that neither the elder Baazov nor Levett had played any role in the company’s launch. Amaya also claimed that Josh Baazov “to the best of the company’s knowledge, is not, and never has been, an Amaya shareholder.”