Amaya CEO David Baazov is taking an indefinite paid leave of absence from the company he founded in 2004 as a financial investigation into his possible role in an alleged insider trading scheme lingers.
“Mr. Baazov is taking this leave voluntarily to focus on preparing an offer to acquire Amaya and to avoid a distraction for the company while he responds to certain allegations made against him,” Amaya said in a press release.
Quebec’s Autorité des Marchés Financiers (AMF), a regulatory body with similar responsibilities to the United States’ Securities and Exchange Commission, charged Baazov last week on five counts of trading misconduct. In particular, the AMF alleges that Baazov aided in stock trades while in “possession of privileged information.”
Amaya purchased the Oldford Group in June of 2014 for $4.9 billion. Oldford owned the Rational Group, whose holdings included PokerStars and Full Tilt Poker, which instantly made Amaya a worldwide interactive gaming leader when the deal was completed.
AMF authorities claim Baazov might have used internal knowledge to influence outside investors into making strategic investments leading up to the acquisition.
Current Rational CEO Rafi Ashkenazi has been named Amaya’s Interim CEO during Baazov’s leave, while Divyesh Gadhia will serve as Interim Chairman of the Board.
The AMF investigation isn’t focused solely on Baazov, but also his reported longtime friend Benjamin Ahdoot and Amaya adviser Yoel Altman. In addition, the AMF report names three companies as actively participating in the alleged trading corruption.
As expected, Amaya’s stock price nosedived following the AMF news.
Traded on the Toronto Stock Exchange and NASDAQ, Amaya was selling for $14.22 on March 22 in the US. When Quebec’s securities regulator announced Baazov was a subject in an investigation, the price plunged to $11.19 the next day.
Amaya has since been on a rollercoaster ride as capitalists scramble to decide whether the AMF scrutiny has merit, and if Baazov will eventually be proven of any misconduct.
On Tuesday, Amaya was trading up in early morning activity. The stock climbed more than four percent in pre-noon hours.
Baazov is not just the CEO of Amaya, but the brainchild behind the company’s fast rise to the top of the Internet gaming and poker world. Labeled the “King of Online Gambling” by Forbes, Baazov is to Amaya as Steve Jobs was to Apple.
Though he’s facing a $5 million penalty and five years in prison should he be found guilty on all five AMF charges, Baazov says his leave of absence is as much to do with his continued quest to take back the company he founded as it does with the ongoing investigation.
“I believe that stepping down in the short term will help to avoid distraction for the company and its management while I vigorously contest all allegations made against me and pursue my bid to acquire the company,” Baazov stated.
Reaffirming his goal of complete ownership along with an unidentified group of private investors will likely assist Amaya in seeing the company’s valuation trend in the right direction. Whether shareholders will quickly unload the stock at it reaches pre-AMF levels remains to be seen.