Amaya Founder and CEO David Baazov Named in Trading Allegations by Quebec Authorities

Posted on March 23rd, 2016 by Jon Pineda
Amaya David Baazov insider trading allegations

Amaya’s David Baazov has taken the online gambling and poker world by storm over the last year and a half, but was his behavior in the months leading up to the PokerStars parent company takeover beyond legal approach? Canada’s AMF says “no.” (Image: wsj.com)

Amaya Founder and CEO David Baazov is one of three individuals named in an investigation by Quebec’s securities regulatory authority on suspicions of utilizing information to which had access to aid in stock trades and manipulate the company’s overall valuation.

The Autorité des Marchés Financiers (AMF), the government body responsible for overseeing the financial markets in the Quebec province, suspects Baazov exploited private Amaya information. AMF alleges that Baazov directly influenced the company’s price on the Toronto Stock Exchange (TSX) leading up to its $4.9 billion acquisition of the Rational Group, the then-owners of both PokerStars and Full Tilt Poker.

In an official statement, the watchdog organization says that Baazov is facing a total of five charges relating to trading “while in possession of privileged information.” The AMF went on to claim that the Amaya CEO influenced or attempted to influence “the market price of the securities of Amaya Inc.,” and communicated privileged information.

The AMF probe was initiated in December of 2014, when authorities first raided the Amaya offices.

Oh My Amaya

This week for Amaya and PokerStars can be summed up by using the rather famous Charles Dickens quote, “It was the best of times, it was the worst of times.”

On Monday at 12:01 am EST, PokerStars officially opened up shop in New Jersey and dealt its first legal hand in the United States since the Department of Justice (DOJ) apprehended the website on April 15, 2011.

Early numbers and revenues have been more than promising, an encouraging development for both the New Jersey market and US iPoker in general. So Wednesday’s revelations were the last thing Amaya needed as its rebranding and reintroduction to the country is still in its infancy, from a regulatory standpoint.

The DOJ seized PokerStars and Full Tilt in 2011 for continuing to operate, following the 2006 passage of the Unlawful Internet Gambling Enforcement Act (UIGEA), a federal decree that made it illegal for payment processors to transact client funds pulled from or headed towards gambling websites.

Amaya’s buyout of the company was supposed to give new credibility to the platform once labeled a “bad actor.” New Jersey’s Division of Gaming Enforcement (DGE) spent over a year investigating Amaya’s worthiness for inclusion in its gaming market and forced the company to oust four individuals who had been associated with the company’s post-UIGEA/pre-Black Friday operations.

While not a single US legal charge has been levied against anyone in Amaya when it comes to its securities behavior, the mere suggestion that anything could have been mishandled where shareholders are involved must be viewed as unsettling.

In fact, the day wasn’t halfway done on Wednesday before a class action law firm had put out a call to American shareholders; the firm clearly getting its ducks in line in case the US axe should fall next.

Baazov and Amaya Respond

Currently in the midst of trying to take the company back to privately-held status, the 36-year-old Baazov responded to AMF authorities on Wednesday and denied any criminal misconduct.

The Amaya CEO said he was served notice by the AMF on allegations of engaging “in market manipulation” and unlawfully providing “non-public information to third parties prior to Amaya’s acquisition of the Rational Group.”

“These allegations are false and I intend to vigorously contest these accusations,” Baazov declared.

Amaya also backed its founder. “David Baazov has the full support of the independent members of the board,” Amaya Board Member Dave Gadhia said.

He has their support for now, but should the AMF prove corruption on Baazov’s part, the gaming exec would likely fall from those good graces. It would be a disheartening conclusion to one of the more remarkable rises to power in gambling history.

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