Ontario’s top securities regulator has dismissed an insider-trading case tied to Amaya Inc.'s US$4.9-billion takeover of the owner of PokerStars, ending a multiyear probe that accused four people of illegal behaviour.
On Tuesday, the Ontario Securities Commission dismissed its case against CIBC investment adviser Frank Soave after concluding that he did not know the person who gave him the tip was in a position to have inside knowledge.
The decision follows settlements with three other people the regulator accused of either insider-trading or insider-tipping on Amaya – Ben Cheng, John David Rothstein and Eric Tremblay. All four men had ties to Bay Street money manager Aston Hill Financial Inc., and the allegations in all four cases were announced in the same statement in the spring of 2017.
While the batch of allegations has been addressed, regulators' scrutiny of the Amaya takeover will continue – nearly five years after the deal was first announced. Late last year, the OSC unveiled a new batch of allegations, extending a probe that seemed to be coming to an end.
Amaya, an online gambling company, changed its corporate name to the Stars Group Inc. in 2017.
In its allegations, the regulator’s staff argued that Mr. Soave was tipped off to Amaya after receiving a call from Mr. Rothstein, who was a sales manager at Aston Hill. The regulator alleged that Mr. Soave was told Aston Hill was participating in a financing to help Amaya fund its takeover, and that Mr. Soave bought 5,000 Amaya shares on the information, which he sold the day after the takeover announcement for a profit of $38,166.
However, in their final ruling, the commission’s judges determined there was no proof that Mr. Soave knew that Aston Hill was involved in the financing. There is “no direct evidence that Mr. Soave was told that [Aston Hill] was participating in Amaya’s Acquisition or that he knew that Mr. Rothstein was in a special relationship with Amaya,” the commission wrote in its ruling.
Mr. Rothstein quickly settled with the regulator after it announced its allegations in 2017. He was ordered to pay $11,000 and was banned from working at a senior level in the fund industry for the next two years.
Mr. Cheng, once a star money manager on Bay Street, settled with the regulator in 2018 when he was ordered to pay a $400,000 fine and banned from working at a senior level in the Canadian securities industry for six years. Mr. Tremblay also settled in 2018 and agreed to pay a $135,000 fine and was banned from working at a senior level in the Canadian securities industry for two years.
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