AMF Investigates Amaya In Possible Illegal Trading Transaction

Following Amaya Inc ‘s purchase of Pokerstars, its stock trading activities are being probed.

Less than two weeks after Forbes copped David Baazov ‘The King of Online Gambling’, cops raided his Amaya Inc’s Pointe-Claire offices. Indeed the company has been under scrutiny by the Autorite de Marches Financiers of Quebec (AMF) when Amaya’s stock price rose suspiciously since May.

The company formerly known as Amaya Gaming Group Inc.company, which has internet gambling sites in Canada, declared that raids were carried out by the Royal Canadian Mounted Police (RCMP) and AMF as well as on affiliated companies. AMF is the Quebec agency that oversees the province’s securities industry.

‘Business as usual’ despite raids

The investigation came on the heels the 2014 summer takeover of the Oldford Group by Amaya Inc. The corporation’s spokesman, Eric Hollreiser, says the investigation doesn’t mean that the company is involved in any wrongdoing and that it will give its full support to the regulatory authorities.

• Amaya plc purchased Oldford for $4.9 billion
• Company may be fined and sanctioned
• Baazov keen on setting up online poker business in USA

Hollreiser also said that it will be ‘business as usual’ for employees and the companies under investigation, including the Canaccord and Deutsche Bank Securities, who were the main banks involved in the acquisition transaction.

AMF’s spokesman, Sylvain Théberge, confirmed the investigation and the raid but said he couldn’t divulge further information. The RCMP explained their involvement in the matter by saying that they were just helping out with the investigation by furnishing search warrants and security for the raids.

Baazov’s small Montreal-based operation was transformed into a million dollar industrial giant, when it bought the Oldford Group this June, for an estimated $4.9 billion. The latter is the parent company of the Rational Group Ltd which owned and operated PokerStars and Full Tilt Poker.

Amaya’s suspicious trading activities

When a company takes over an online gaming business, the new owner must be approved by the regulators, under Canadian gambling laws, before being allowed to do so, as is Amaya Gaming’s case. Amaya has to furnish documented information on the company’s finance as well as their experience in the industry.

The company must then have the regulators’ approval, as well as that of the Toronto Stock Exchange, for the transaction. This approval includes the listing of components that would be used for the financing of the transaction with Rational Group.

The thing is Baazov didn’t have to invest a cent of his own capital, Blackstone Group, the world’s largest equity firm that provides a large part of the funding and which is the company’s largest investor. The transaction created the world’s largest publicly-traded online gaming company as a result of its acquisition and that is precisely what is being investigated.

Baazov boasted that he based his credit to buy Oldford on the fact he would be taking his company’s stock from $7 a share to $21 a share. After the acquisition, revenues upped to $238.96 million by end of September, compared to last year’s Q3 which saw Amaya only netting a $38.584 million profit.

Amaya’s stocks nosedive

The company’s shares plummeted when Canadian gambling news
announced the criminal investigations. As of last Friday afternoon’s closing, the company’s trading stocks dropped to $25 a share. This is considered the biggest drop at 25% since the company went public in 2010.

An unidentified analyst explained that ‘whenever a securities regulator shows up there is always cause for concern’. He went on to state that when the AMF starts an investigation, the company being probed normally ends up paying fines, with sanctions or criminal charges in violation of the Securities act accumulating against it.

In the meantime, Baazov also plans to compete with land-based giant Sheldon Adelson to reinstate online poker to the United States. He hopes to do so through his American connection, Wesley Clark, a retired general and former 2004 democratic presidential candidate who is currently an independent Director on Amaya’s board.
Week in Pictures
Baazov’s Amaya be charged for engaging in criminal trading activities if AMF investigation reveals illicit transactions took place when Amaya acquired Oldford in June 2014