More light has been shed on the insider trading shenanigans surrounding Amaya Gaming’s 2014 purchase of PokerStars‘ parent company.
On Wednesday, the Ontario Securities Commission (OSC) filed paperwork detailing allegations of insider trading by former top executives at investment firm Aston Hill Financial, who are accused of passing on privileged information regarding Amaya’s $4.9b deal for the Rational Group, then lying to securities investigators to cover their tracks.
Aston Hill, which merged with Front Street Capital to form LOGiQ Asset Management last year, was reportedly invited to participate in the Rational Group deal financing, and the OSC believes Aston Hill’s former president Benedict Cheng first became aware of the prospective deal in April 2014, two months before the acquisition was announced.
The OSC says Cheng “instructed, encouraged and/or suggested” that senior VP John David Rothstein alert select Aston Hill clients regarding the imminent Amaya deal. The clients were reportedly selected because they had lost money following previous Aston Hill-directed investment decisions.
Rothstein reportedly told CIBC Wood Gundy investment adviser Frank Soave about the Amaya deal on June 12, 2014. That same day, Soave, who had previously never bought any Amaya stock, bought 5k shares at C$12.10 apiece just two hours before a sudden surge in the stock price caused the Toronto Stock Exchange to halt trading in Amaya shares.
The acquisition was confirmed that night and Soave sold his shares the following morning at an average price of C$19.78, netting him a profit of C$38,166, a 63% return on his 24-hour investment. Rothstein reportedly bought 700 Amaya shares that realized a profit of C$5,507 when he sold them two days later.
Aston Hill CEO Eric Tremblay is also caught up in the affair, having reportedly made “misleading or untrue statements” to OSC investigators looking into the insider dealings. Cheng and Soave face similar allegations of untruthfulness, while Rothstein is reportedly attempting to cut a deal with investigators.
The OSC will hold a hearing into the affair next Tuesday (18) at its Toronto headquarters. A followup hearing has been scheduled for May 4.
L’affaire Amaya first made headlines when Quebec’s securities regulator raided the company’s Montreal headquarters in December 2014. In February 2015, a US securities watchdog flagged around 300 investors whose pre-acquisition Amaya dealings were deemed to be sketchy, while Quebec’s probe centered on a tightly-knit group of Manulife Securities brokers.
In March 2016, former Amaya CEO David Baazov and two other individuals were hit with insider trading criminal charges. Baazov, who stepped down as Amaya CEO last August, pled not guilty to the charges and his trial is scheduled to get underway in November.
Baazov made a couple unsuccessful attempts to acquire Amaya and take it private, prompting Amaya’s lenders to restructure their loan agreements to prevent his future involvement. Last month, Baazov sold off the bulk of his considerable Amaya holdings, which were snapped up by a little known Asian investor.
