Former Amaya CEO David Baazov has been implicated in a pattern of kickbacks and illegal deals dating back six years by Canada’s Autorite Des Marches Financiers securities regulator.
The regulator says it has uncovered a sophisticated system of insider trading involving Baazov by which kickbacks were paid in exchange for stock tips on several impending takeovers. The deals stretch back six years.
However, a freeze-trade hearing was held in the case last week and an investigator for the AMF admitted under cross examination that the regulator’s evidence against Baazov was largely circumstantial.
Baazov is under investigation for alleged insider trading charges stemming from Amaya’s 2014, $4.9 billion acquisition of the Rational Group, owner of PokerStars.
According to Canada’s Globe and Mail newspaper, the disclosure came from court documents from the regulator laying out its case against Josh Baazov, David’s brother, and 12 others who faced allegations in March of trading on inside information involving Amaya. The regulator says its investigation has found evidence that the group had a refined system that rewarded insider information with kickbacks typically representing 10 percent of the net profits gained.
“These were the activities of an organized group that traded regularly on information of numerous mergers and acquisitions still unknown to the public,” the AMF said in the documents. Baazov was the source of much of the privileged intelligence, the regulator alleges.
Two of the deals the individuals made money on included Scientific Games’ purchase of WMS Industries Inc. and the Intertain Group’s purchase of some assets belonging to Gamesys. Though they did not involve Amaya, the regulator says the evidence suggests Baazov’s connections allowed him to obtain information to tip off others.
Kickbacks were allegedly paid in many forms, including cash, checks and luxury objects such as a $13,000 Rolex Daytona watch, the regulator said. In all, the AMF estimates the individuals made a combined profit from the trades of about $1.5-million.
According to the paper, AMF investigators have accessed e-mails, text messages and phone and bank records belonging to many of the individuals as it tries to piece together a case against Baazov and other associates.
Baazov was charged in March with five counts of insider trading relating to Amaya’s $4.9-billion acquisition PokerStars owner Oldford Group Ltd. The charges included aiding in trades while in possession of privileged information, influencing or attempting to influence the market price of Amaya securities, and communicating privileged information. Benjamin Ahdoot, a childhood friend of Mr. Baazov, and Yoel Altman, an adviser to Amaya, were also charged with insider trading.
At the hearing, as reported by the Globe and Mail, Baazov maintained that he’s innocent of the charges following the admission by an investigator for Quebec’s securities watchdog that it has no direct proof of privileged information being shared over the phone about several corporate takeovers.
Xavier Saint-Pierre, an investigator for the AMF said under cross-examination by Baazov’s lawyer that there is only circumstantial evidence suggesting Baazov passed on information related to three of seven corporate deals being probed by the regulator and which he was asked about.
“Today was the first step in setting the record straight,” Baazov said in a statement. “I would like to reiterate that I did not receive any money, gifts or anything for that matter as it relates to the trading by any of these people in any securities. I look forward to being exonerated and putting this behind me.”
