Federal officials may be investigating the possibility of insider trading in the award of a casino license in New York’s Catskills region.
A report in The New York Post says U.S. Securities and Exchange Commission officials noticed unusual trading activity in shares of Empire Resorts in the days before the operator was selected for a lucrative casino license in December 2014.
The state’s Gaming Facility Location Board chose Empire’s $1.3 billion Montreign Casino project near Monticello as one of three destination-scale gambling resorts to be built across the state. A fourth casino site was selected later.
Empire, whose largest stakeholder, K.T. Lim, is chairman of Malaysia-based gaming conglomerate Genting, was the only publicly traded company among the entities selected for licenses.
The volume of trading in Empire nearly tripled from 31,132 shares bought and sold on December 12 to 82,495 shares traded on December 16, the day before the award, according to Nasdaq records. The stock price climbed during this period from $32 per share to $40. On December 17, the day the state panel announced the three winners in the early afternoon, the trading volume skyrocketed to 443,883, while Empire’s stock price fell below $36 per share.
“The SEC was investigating it within two days of what had occurred,” a source told The Post. “It got them very suspicious.”
The FBI in 2015 also began examining how the Gaming Facility Location Board chose the casino proposals and who may have benefited, a casino industry source told The Post.
“(The FBI agent) asked about Empire and was looking into whether there was anything in casino procurements,” the source said. “The spike in trading at the time came up.”
An Empire spokesman said they have had not been contacted by the SEC or the U.S. Attorney’s Office. An attorney for the administration of Gov. Andrew Cuomo likewise told The Post that he was not aware of any investigations involving casinos and had not been asked to provide any casino-related records to authorities.
U.S. Attorney Preet Bharara’s office and the SEC declined to comment, the Post said.
