Amaya CEO Takes Indefinite Leave Following Insider Trading Charges

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Wednesday, March 30th, 2016 | Written by Adam Brown

The Chief Executive Officer of Amaya Inc, David Baazov, was recently charged with insider trading by the Quebec Securities regulators (AMF). The same day the news was announced, shares in the world’s largest online poker company took a dive and closed 21% down on the Toronto stock market. While he formulates a response to the allegation, Baazov has decided to take an indefinite leave of absence from the company, and said:

“As always, I continue to be dedicated to doing the right thing for Amaya and all its stakeholders. 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.”

Others hit with similar charges includes Bazoov’s close friend Benjamin Ahdoot, a former Amaya adviser Yoel Altman, as well as three companies, namely Diocles Capital inc,, Sababa Consulting inc., and 2374879 Ontario inc.

Insider Trading Charges

The Quebec Autorité des Marchés Financiers (AMF) has charged David Baazov with “aiding with trades while in possession of privileged information”, attempting to influence, and actually influencing the market price of the shares of Amaya Inc., and finally communicating and sharing the private information outside the company. The AMF has made tackling illegal insider trading and market manipulation one of its top priorities as such illegal behavior directly affects the integrity of the market, and the public confidence in it.

Bazoov Denies Allegations

Despite the AMF’s allegations, David Baazov claims that all the charges are false, and has said that he will fiercely contest all the allegations made against him in the court of law. The company is expecting the same verdict. Based on further investigation of Amaya Inc., the accused are thought to have been using privileged data for securities trading purposes between December 2013 up to June 2014. None of the claims, however, have been proven in court yet. If they are found guilty, though, the guilty parties will be subject to heavy fines of around $5 million, and could face up to 5 years in prison, as well as demotion or elimination from their current position at Amaya Inc.

Plan to Take Amaya Private

Nevertheless, David Baazov said he will continue his plan to provide an all-cash offer to acquire Amaya Inc for an estimated price of C$21 per share. He also claims that this proposal was made to the board of directors a long time before he was accused of these allegations by the AMF. Currently, Baazov owns $24.6 million worth of common equity shares in Amaya Inc, and is willing to acquire further shares to the amount of $2.8 billion. He says he will remain committed to working with the investor groups along with the board of directors to forge an agreement and carry out a successful transaction which, according to Baazov, is in the best interest of the shareholders.

Rafi Ashkenaz Becomes Interim CEO

In the meantime, Rafi Ashkenaz has been made Amaya’s interim CEO, who already works as CEO of the Rational Group, the subsidiary of Amaya that operates the company’s biggest brands, PokerStars and Full Tilt. Amaya has also appointed Divyesh Gadhia as the firms chairman of the board, who has been a company director since 2010, and chairs the committee tasked with evaluating Baazov’s takeover proposal. Following his appointment, one of Divyesh Gadhia’s first actions was to instruct Amaya’s financial adviser, Barclays Capital Canada, to contact outside parties with an interest in Amaya transactions. As Gadhia explains:

“The special committee has not made a determination as to whether a sale of Amaya is in the best interests of the company at this time. The special committee will consider any offer made by Mr. Baazov and any expressions of interests made by third parties if and when any such offers or expressions of interest are made.”

Amaya Share Prices

Following allegations by the AMF, the share price of Amaya stock fell 21%, and by Monday closed at C$14.81. Bazoov taking indefinite leave has had a positive effect on investors, though, and by the end of the following day Amaya’s share price had risen by 12.8% to C$16.70, given the company a market capitalization of C$2.14 billion.