In what was being billed as the biggest insider trading scandal in Canadian history, a judge dealt a crushing blow on Wednesday to Quebec’s securities regulator, l’Autorite des marches financiers (AMF) — dismissing charges against former Amaya CEO David Baazov and his co-defendants due to legal mistakes made by the AMF.
In 2016, Baazov was charged with insider trading and securities fraud related to Amaya’s $4.9 billion purchase of PokerStars in 2014. Regulators claimed that the Amaya founder and CEO allegedly tipped off two investors, his eventual co-defendants, Benjamin Ahdoot and Yoel Altman, to the coming sale so they could profit handsomely.
Following the acquisition, Amaya’s stock price skyrocketed as the boutique online gambling company overnight became the largest publicly traded gaming operator in the world.
After being charged in 2016, Baazov was removed as CEO by the company’s board. Amaya would later change its name to The Stars Group and relocate from Montreal to Toronto in an effort to distance themselves from their besmirched former leader.
Baazov and his codefendants, meanwhile, had pleaded not guilty to 23 charges in total for allegedly influencing or attempting to influence Amaya’s stock price. The trial had been going on for six weeks and was expected to continue through the fall.
On three occasions, Baazov’s attorneys filed motions to have the case dismissed, citing frustration with the AMF for allegedly withholding evidence. On the third try, in response to a motion filed on May 24 in a Quebec court, the judge finally ruled in favor of the defense.
Last month, the AMF mistakenly shared nearly 320,000 “privileged” documents with the defense via email that it had previously withheld, and then wanted them back.
Baazov lawyer Sophie Melchers argued that the request was ridiculous. “We cannot unscramble the egg,” she said.
But in filing a motion to get the documents returned, the AMF provided an opening for the defense to claim the AMF had been improperly withholding evidence, making it difficult to properly defend their client.
The argument worked. On Wednesday, Judge Salvatore Mascia dismissed the case against the former Amaya CEO and his co-defendants, putting an end to the six-week trial.
“When the circumstances justify it, the courts must stay the proceedings,” Mascia said. “This is only to be used in the most dramatic cases. There must be no other acceptable solution that might right the wrongs.”
The judge continued from the bench: “In this case, do the accumulation of mistakes require a stay of proceedings? Yes.”
Troubles Behind Him?
“We are obviously very disappointed with the judge’s decision,” the AMF said in a statement released Wednesday. “We are going to analyze the judgment very closely as well as assessing the pertinence of filing an appeal.”
AMF lawyer Geneviève Régnier referred to Mascia’s decision as the “most draconian” ruling for a procedural error.
The three defendants, not surprisingly, had a different take.
“We agree with the judge and are happy with the decision,” the trio said in a joint statement.
Baazov may no longer need to worry about being sent to prison, but it remains to be seen what sort of impact this will have in the court of public opinion, particularly if he intends to get back into the internet gambling business.