Industry Reports

Ex-Amaya CEO David Baazov Escapes Insider Trading Trial

A Quebec court ended the insider trading trial against gambling mogul and ex-Amaya CEO David Baazov, who was accused of manipulating the market prior to 2014’s acquisition of PokerStars. On Wednesday, all charges against Baazov and the other co-accused were stayed after defence lawyers filed a motion last week.

More than two years after Quebec’s securities regulator, l’Autorite des marches financiers (AMF) charged Baazov with several insider trading counts, Court of Quebec Judge Salvatore Mascia granted the defence’ third motion to stay all proceedings. During Wednesday’s hearing, all charges were dropped not only against Baazov but also against financial advisor Yoel Altman and Amaya exec Benjamin Ahdoot. The three men along with three Ontario-based companies faced a total of 23 charges and at risk of being fined with $5 million and of being sentenced to up to 5 years in prison.

The judge made this decision based on an AMF’s mistake when the regulator accidentally shared 320,000 potentially confidential documents with the defence. On May 15, AMF sent an email to Baazov’s lawyers, saying it had mistakenly disclosed information with them. The regulator also requested that these documents are pulled and the defence’ access to them limited. According to Baazov’s lawyers, these 320,000 documents were only a small part of the millions of papers sent to them by the AMF in the last minute. In a previous motion, they asked the court to drop the trial on the grounds that the AMF had intentionally sent them a massive amount of documentation as evidence that they had no time to review before the start of the trial.

While the two previous motions were rejected, this time, Judge Mascia ordered a stay of proceedings after the defence claimed that pulling evidence at this stage of the court case was a violation of defendants’ constitutional right to a fair trial. In an official statement, Quebec’s securities regulator said Wednesday that it will explore the possibility of appealing the ruling. Until then, however, Canadian businessman David Baazov, once known as the “king of online gambling”, can heave a sigh of relief as he is no longer on trial.

The Biggest Insider Trading Case in Canadian History

In 2016, Baazov and his associates were charged with securities fraud accounts after an investigation into the $4.9 billion PokerStars deal. With this historic acquisition, Amaya, which later changed its name to The Stars Group, became the largest online poker operator in the world. Even now, it remains one of the largest and most influential gambling companies on a global scale. It owns the biggest online poker brand, PokerStars, as well as Full Tilt Poker, BetStars, and since April this year, the British gambling company Sky Betting and Gambling.

Back in 2014 and a little before that, the David Baazov was president and chief executive officer of a small Montreal-based firm, called Amaya. Several months before Amaya’s purchase of PokerStars, its stock price jumped dramatically due to investors’ betting on it. There was heavy trading of the shares and market manipulation, for which Baazov was allegedly responsible. According to Quebec’s securities watchdog, the former exec communicated privileged information. The AMF also charged him with accounts of aiding with trades while in possession of privileged information and influencing or attempting to influence the market price of the securities of Amaya Inc.

With the PokerStars deal, Baazov managed to turn the small online gambling and tech firm into an online poker giant. The price of the acquisition, roughly US$4.9 billion, and its huge impact on the global gambling market urged some to call the investigation against Baazov “the biggest insider trading in Canadian history”. After Wednesday’s hearing, all charges are dropped and the trial against him ended surprisingly after a legal blunder and AMF’s apparent oversight.