Quebec’s securities watchdog says it has uncovered a sophisticated system of insider trading involving former Amaya Inc. chief executive David Baazov by which kickbacks were paid in exchange for stock tips on several impending takeovers. The deals stretch back six years – long before Amaya took over gambling behemoth PokerStars in 2014.
Further, the Autorité des marchés financiers (AMF) says some members of a close-knit network of family and friends continued trying to profit from privileged information into this year, seemingly unperturbed by the regulator’s investigation into the matter.
In court documents laying out its case against Josh Baazov, David’s brother, and 12 others who faced allegations in March of trading on inside information involving Amaya, the AMF says its investigation has found evidence that the group had a refined system that rewarded insider information with kickbacks typically representing 10 per cent of the net profits gained.
“These were the activities of an organized group that traded regularly on information of numerous mergers and acquisitions still unknown to the public,” the AMF said in the documents, adding the individuals involved sometimes used coded language to conceal the real meaning of their messages to each other.
Information filtered down and out in a pyramid-like fashion with David Baazov being the source of much of the privileged intelligence, the regulator alleges. Kickbacks were paid in many forms, including cash, cheques and luxury objects such as a $13,000 Rolex Daytona watch, the regulator said. In all, the AMF estimates the individuals made a combined profit from the trades of about $1.5-million.