Amaya founder David Baazov has pleaded not guilty to charges levied against him by the Autorité des Marchés Financiers (AMF), Quebec’s financial and securities regulator.
Baazov is accused of five charges by AMF officials for “aiding with trades while in possession of privileged information, influencing or attempting to influence the market price of the securities of Amaya Inc., and communicating privileged information.”
The charges relate to the Canadian interactive gaming conglomerate he founded in 2004 and its $4.9 billion June 2014 acquisition of PokerStars and its parent companies, the Rational Group and Oldford Group.
Baazov voluntarily took a paid leave from his positions as Amaya CEO and chairman in late March.
“As always, I continue to be dedicated to doing the right thing for Amaya and all its stakeholders,” Baazov said at the time. “I believe that stepping down in the short term will help to avoid distraction for the company and its management.”
Along with Baazov, two others, Yoel Altman and Benjamin Ahdoot, and three companies, Diocles Capital, Sababa Consulting, and 2374879 Ontario Inc., have entered formal not guilty pleas per the AMF.
A total of 23 charges have been brought by AMF investigators against the three individuals and three companies.
Baazov is personally facing up to five years in prison. Penalties for insider trading vary greatly in Quebec, AMF spokesman Sylvain Theberge saying they can range anywhere from $5,000 to $5 million per charge.
Amaya has stood by its founder since the AMF first announced its investigation into Baazov’s dealings leading up to the multibillion-dollar purchase. The company said in March, “David Baazov has the full sport of the independent members of the board” and explained that the company “conducted an extensive internal review” and “found no evidence of any violations of Canadian securities laws or regulations.”
The scandal has made Amaya one of the most volatile stocks on NASDAQ (AYA).
On March 22, Amaya closed at $14.25. The next morning it plummeted on the Baazov news to $11.18.
It’s since regained some of its losses as investors cautiously keep tabs on the continued investigation. As of Wednesday afternoon, the stock was trading around $12.50.
The AMF says the Baazov case will soon be forwarded to a court in Quebec where a judge will be selected to oversee the trial.
The 35-year-old reportedly remains confident that his name will eventually be cleared, and his Amaya buyback plans are still intact.
On February 1, Amaya confirmed Baazov was planning to submit a formal all-cash bid to reacquire the company in whole and take it back private. Along with a group of unknown investors, Baazov’s official bid is still outstanding, and what valuation he plans to put on the company remains a mystery.
Baazov stated three months ago that he would offer around $16 per share, but no update on that figure has been provided.
The Amaya board of directors has established a special committee to review any forthcoming proposal, and shareholders would have the final say in determining whether to sell the company back to Baazov.