Industry Reports

Montreal-Based Tech Company’s Offices Raided in Alleged Link with Amaya Insider Trading Case

Last fall, the security regulator of the Canadian province of Quebec Autorité des marchés financiers (AMF) raided the offices of the Montreal-based company Hypertec. Earlier today, The Globe and Mail reported that the move came after the security regulator tabled bombshell allegations of suspicious business relationships between the Canadian gambling giant Amaya (recently re-branded into The Stars Group) and Hypertec.

The Canadian gaming company that bought one of the world’s most popular cardrooms PokerStars appeared at the heart of a serious controversy after David Baazov, former Chairman and CEO of Canadian gambling giant Amaya Inc. allegedly used privileged insider information in an attempt to benefit from the company’s trades on the stock market.

Investigators with AMF suspected that Hypertec (a leading provider of customized IT solutions and services for small- and medium-sized businesses) was used to disguise control over a secret block of shares held by David Baazov, his brother and another associate, The Globe and Mail reported. The police reports revealed that in September, the investigators had raided the primary offices of West Island, confiscating a computer, cellphone, hard drive and USB keys belonging to its chief financial officer, Nathan Meirovici. However, no charges against Mr. Meirovici or the IT company have been laid thus far.

Security Regulator Tables More Allegations

The Quebec agency that oversees the province’s securities industry announced that it remains dedicated to laying charges against the guilty ones in what has become Canada’s largest insider trading case. Documents filed to support the September search warrant requests revealed that former Amaya CEO David Baazov, together with his brother Josh Baazov and a third associate Craig Levett secretly held control over a block of shares in Amaya.

The AMF suspects that the block of shares was “reserved” for the men from Hypertec under a deal inked as far back as 2009. These shares were used to finance part of Amaya’s pending acquisitions of Chartwell Technology Inc. and CryptoLogic Ltd. that took place in 2011. The three associates allegedly pocketed more than $1 million from trading classified insider information. The documents also allege that Mr. Baazov held shares in his name, while his brother was the true owner of these. It is important to note that these allegations remain unproven and have not been tested in court.

The executive vice-president of Hypertec, André Lamarre, commented that Hypertec has established a strong business relation with The Stars Group, but the tech company has never been involved in such deeds. He added that Mr. Meirovici will continue to be the company’s chief financial officer. A spokesman for Mr. Baazov explained that his client has never been involved in such illicit practices and he has never transferred his shares in Amaya to anyone when the company went public or after that.