Amaya Gaming CEO David Baazov Is Charged with Insider Trading in Relation to PokerStars Purchase

Amaya Gaming CEO David Baazov Is Charged with Insider Trading in Relation to PokerStars Purchase
David Baazov was charged with 5 counts in the 23-charge indictment.

David Baazov, the CEO of Amaya Gaming, has been charged by the Autorte des Marches Financiers (AMF) with insider trading. The AMF is the securities regulators for the province of Quebec in Canada, so these are serious charges against Baazov.

The AMF filed 23 different charges related to the case. Five of the charges were filed against David Baazov. The insider trading is associated with Amaya’s $4.9 billion purchase of PokerStars in 2014.

Charges Stem from PokerStars Purchase

In July 2014, Amaya Gaming purchased Rational Group, which owned PokerStars and FullTilt Poker. In the days before the PokerStars deal was announced, Amaya Gaming saw a 50% increase in its stock price. After the purchase was announced, Amaya’s share prices rose an additional 30%.

The increase before the big announcement was made made regulators at Autorte de Marches Financiers suspicious. They immediately began a probe into the possibility of insider trading, studying the transactions — who was buying and selling.

5 Charges against Baazov

The charges against David Baazov include a variety of crimes, including influencing (or attempting to influence) the market price of Amaya’s securities; communicating privileged information; and aiding with trades while “in possession of privileged information“.

If he is found guilty of such charges, then David Baazov would have to pay substantial fines or spend time in prison, or both.

David Baazov released a statement, protesting his innocence and saying he will be cleared of the charges. Baazov said in his statement, “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.

Probe over a 5-Month Period

The charges cover suspicious activity from a half-year of trading, from December 2013 to June 2014. Stories about the purchase of Rational Group quoted both David Baazov and the Scheinbergs (who owned PokerStars) stating that the negotiations took place over a number of months, so the long time frame of possible insider trading is realistic.

Louis Morisset, the President of AMF, said that his organization has made market manipulation and illegal insider trading a key focus for their regulatory oversight. Morisset said such practices undermine public faith in the market, and thus need to be policed vigorously.

Amaya’s Board Conducted Internal Probe

Dave Gadhia, the Lead Director of Amaya Gaming, said that David Baazov retains the support of the full independent board of directors. Mr. Gadhia said the board conducted their own internal investigation into such trading and found no wrongdoing under Canadian securities law. Gadhia said Amaya Gaming was given no new information by the AMF which would change their opinions.

Amaya Gaming said it is cooperating fully with Canadian regulators, including handing over a large cache of publicly accessible information. Amaya said it would make that information available on its website as soon as it was appropriate to do so.

AMF Suspends 13 Traders

The AMF originally released a 3-person list of people involved in their investigation: David Baazov, Yoel Altman, and Benjamin Ahdoot. According to media sources, Benjamin Ahdoot is a childhood friend of David Baazov’s.

Subsequently, a large list of people whose trading privileges have been suspended for the time being.

The list of thirteen people is: Josh Baazov (brother of David Baazov), Mark Wael Antoon, Craig Levett, Earl Levett, Karl Fallenbaum, Nahtalie Bensmihan, Alain Anawati, Mona Kassfy, Eleni Psicharis, Feras Antoon, Isam Mansour, Allie Mansour, and John Chatzidakis. It can be assumed that these people were investigated, though not all of them are likely to be charged.

Impact on PokerStars in New Jersey

The investigation should have no impact on PokerStars’ recent launch in the New Jersey online gaming niche. The New Jersey Division of Gaming Enforcement conducted an investigation into the same charges, interviewing 80 people in several different countries, including Canada.

At the time the DGE gave PokerStars its approval, the regulatory agency gave Amaya Gaming its full approval. While the DGE could not investigate in Canada as deeply as the AMF, the New Jersey regulator indicated its investigation was thorough and had touched upon the subject.

About Cliff Spiller

Cliff Spiller Steve came to his interest in poker later in life than some; a freelance writer who primarily covers the financial industry, Steve was drawn to online poker by the striking similarities shared between the markets and the games played at poker sites. Steve heads up content areas related to banking, security and currency as they relate to playing poker online.

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