In Canada, the former Chairman and Chief Executive Officer for online gaming firm Amaya has reiterated his innocence on charges of insider trading following an admission by Quebec’s securities watchdog that it holds no direct evidence that he had illegally shared privileged information regarding several corporate takeovers.
According to a report from The Globe And Mail newspaper, David Baazov is being charged with leading a tight-knit group that collectively made around $1.1 million on stock trades from tips he provided stretching back to 2010 including Toronto-listed Amaya’s purchase of Cryptologic Limited and Chartwell Technology Incorporated as well as Scientific Games Corporation’s takeover of WMS Industries Incorporated.
The Autorite Des Marches Financiers securities regulator alleges that Baazov passed on information about deals to his older brother, Josh, and Montreal-based businessman Craig Levett who then shared these details with others in exchange for kickbacks totaling 10% of any net gains.
Baazov is Amaya’s largest stockholder with more than 24.5 million shares, which represents nearly 17% of its circulating stock, and resigned last month after taking an unpaid leave of absence in March. The Autorite Des Marches Financiers is reportedly probing seven deals that allegedly involved the Montreal businessman including his firm’s purchase of online poker operator Rational Group for $4.9 billion.
However, under cross-examination by Baazov’s lawyer as part of a hearing into a cease-trade application on Wednesday, Xavier Saint-Pierre from the Autorite Des Marches Financiers reportedly declared that it holds only circumstantial evidence suggesting the entrepreneur passed on information relating to three of the seven corporate deals being probed. The questioning before the independent administrative tribunal by attorney Sophie Melchers from counsel Norton Rose Fulbright represented the first time any evidence in the case had been tested and underscored the difficulty prosecutors could face in obtaining a conviction in Canada’s largest ever insider trading probe.
The Autorite Des Marches Financiers is using records of e-mail exchanges and mobile telephone calls made between the involved parties as evidence of insider trading but Saint-Pierre admitted under cross-examination that investigators have no idea what was said in those telephone conversations. He further admitted that, in some cases, the calls were so short that it was not even clear whether the individuals actually spoke.
Melchers indicated other gaps in the evidence so far presented including the investigator’s inability to seize Baazov’s mobile telephone during a 2014 raid on Amaya headquarters while she explained that there was no direct correspondence via e-mail between any of the parties that indicated Baazov passed on information regarding the deal involving WMS Industries Incorporated.
The Globe And Mail reported that the freeze-trade application hearing is due to resume on October 4 with continued cross-examination of Saint-Pierre by Melchers while lawyers for Josh Baazov are additionally expected to be on hand to interrogate the investigator.
“Today was the first step in setting the record straight,” Baazov declared in a statement read by spokesperson Ian Robertson. “I would like to reiterate that I did not receive any money, gifts or anything for that matter as it relates to the trading by any of these people in any securities. I look forward to being exonerated and putting this behind me.”