Quebec's securities watchdog raided the offices of Montreal information-technology company Hypertec last fall in connection with its ongoing Amaya Inc. insider-trading investigation, alleging the taxpayer-supported tech firm was used as a front to mask control over a secret block of shares held by Amaya's founder, his brother and another associate.
Investigators with the Autorité des marchés financiers (AMF) searched the West Island headquarters of closely held Hypertec in September, seizing a computer, cellphone, hard drive and USB keys belonging to its chief financial officer, Nathan Meirovici, according to court records. They also searched the Mr. Meirovici's home.
Neither Hypertec nor Mr. Meirovici has been charged with any offence.
The company rejects the allegations made against it and says it has always adhered to the highest standard of business ethics.
Details of the raids have not been previously reported.
They show Quebec's securities regulator continues to push aggressively with probes into the activities of Amaya founder David Baazov and his associates, even as Mr. Baazov's own case has reached the trial stage. More people are coming under scrutiny in what has already been described as Canada's biggest-ever insider-trading investigation.
"The events took place four years ago and the case is still going on, despite the fact that ample legal, police and regulatory resources seem to have been devoted to it," said Michel Magnan, a corporate governance specialist at Concordia University. "This shows that criminal investigations involving insider trading are complex affairs."
In a move that stunned the poker world, Mr. Baazov's Amaya, a gaming and online-gambling company, secured the backing of big-name Wall Street investor The Blackstone Group LP for an improbable $4.9-billion (U.S.) takeover of betting giant PokerStars in 2014. The AMF alleges information about the impending acquisition was leaked deliberately in advance by Mr. Baazov, partly to pump up the value of Amaya shares.
Mr. Baazov is charged with "aiding with trades while in possession of privileged information," influencing or attempting to influence the market price of Amaya securities and communicating privileged information. His co-accused are Benjamin Ahdoot, a childhood friend, and Yoel Altman, a consultant based in Toronto. Three Ontario companies controlled by Mr. Altman also face charges.
All six defendants have pleaded not guilty and have filed a motion to have the case against them dropped on grounds that legal proceedings have taken too long. A Quebec Court judge is now weighing the merits of the motion and is expected to rule on it later this month.
The regulator also says it intends to show that Mr. Baazov and Amaya communicated false and misleading information to investors since its first public offering in 2010. It hasn't filed any charges specific to these allegations.
In documents filed to support the September search warrant requests, the AMF says Mr. Baazov, his brother Josh Baazov and Craig Levett, a long-time associate of Josh Baazov, wielded "secret control" over a block of Amaya shares that was never disclosed. The regulator says the stock was held for the men by Hypertec under a deal made in 2009. It says the position topped 1.7 million shares and 859,000 warrants in Amaya a year later, making it one of Amaya's top three shareholders.
The three men used the share block to finance part of Amaya's acquisitions of Chartwell Technology Inc. and CryptoLogic Ltd. in 2011 without any of these transactions ever being declared, the regulator alleges. They sold the shares and disguised the proceeds as a loan, the AMF says, fooling even Amaya's own investment banker, Canaccord Genuity.
The search warrant materials also contain other allegations by the regulator that have not been tested in court. Chief among them, and one that has been reported by Montreal's La Presse newspaper, is that Mr. Baazov held shares in his name that actually belonged to his brother.
Amaya has since changed its name to The Stars Group Inc. and relocated to Toronto from Montreal. Mr. Baazov is no longer on the board or in management, but remains a shareholder in the company, now steered by chief executive Rafi Ashkenazi.
Hypertec is a global provider of information-technology products and services, with more than 3,000 customers in more than 70 countries, according to its website. Its solutions are employed in sectors including finance, aerospace and engineering and include high-performance workstations and data-centre servers. The company received $12-million (Canadian) in aid from the Quebec government in 2016 to support growth projects.
"Hypertec never acted as a front for David Baazov, his brother Josh Baazov, Craig Levett or anyone else," said André Lamarre, the company's executive vice-president. "The company has reviewed the matter and is fully satisfied that there has been no wrongdoing."
Mr. Meirovici remains in his post as CFO, Mr. Lamarre said. Efforts to speak with the CFO and his lawyer were unsuccessful. Hypertec has a long-standing commercial relationship with The Stars Group and David Baazov spanning more than 15 years, Mr. Lamarre said.
Adam Sharon, a spokesman for Mr. Baazov, said the entrepreneur has never held Amaya shares on behalf of anyone but himself when the company went public or afterward. "These unfounded allegations fit an ongoing pattern by the AMF, which is engaged in a never-ending, non-transparent, win-at-all-costs fishing expedition against David," Mr. Sharon said.
Lawyers for Mr. Levett and Josh Baazov said their clients vigorously deny the allegations. They expressed concern that the AMF is advancing theories that have not been considered by any court and whose publication would cause their clients reputational harm. The AMF has been investigating for years and no charges have been laid against either man, they added.