Former Amaya CEO David Baazov used ‘front’ for illegal trades: AMF

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Former Amaya Inc. chief executive officer David Baazov allegedly used a front to disguise trades in stock of the online gaming company ahead of its $4.9-billion takeover bid for PokerStars, a Quebec court heard Tuesday.

The detail was revealed during arguments by Mr. Baazov's lawyer, Sophie Melchers of Norton Rose Fulbright, to support her motion to obtain more disclosure of evidence from Quebec's securities regulator in the insider trading case against her client. She said nearly one million "items" of evidence have been submitted by the regulator without sufficient parameters allowing her to build a proper defence.

"He's being accused of trading via a front that's not identified, with sums owned by an entity that's not identified, on dates that are not identified," Ms. Melchers said of Mr. Baazov. "All those ingredients, we don't know them."

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Ms. Melchers asked the judge to order that the front, a "prête-nom" in French, be named. The case is being heard by the Quebec Court's penal division.

The Autorité des marchés financiers (AMF) laid rare insider-trading charges this past March against Mr. Baazov and has been building a case since then while pursuing its investigation. He is accused of aiding with trades while in possession of privileged information, influencing or attempting to influence the market price of Amaya securities and communicating privileged information.

Benjamin Ahdoot, a childhood friend of Mr. Baazov, and Yoel Altman, an adviser to Amaya, have been charged with insider trading and attempting to influence the market price of Amaya securities in the same case. Three companies – Diocles Capital Inc., Sababa Consulting Inc. and 2374879 Ontario Inc. – are also being charged with similar offences.

The charges came following a probe launched by the AMF into Montreal-based Amaya's blockbuster acquisition of PokerStars owner Oldford Group Ltd. in 2014. At the time, Mr. Baazov was Amaya's founder and chief executive officer. He has since stepped down as CEO and announced he wants to take the company private. A separate non-penal case was also opened against other associates of Mr. Baazov alleging they profited from trades made with privileged information that originated from him. The AMF says it was a sophisticated system through which kickbacks were paid in exchange for tips on several takeovers.

Mr. Baazov has maintained his innocence in both cases. Riyaz Lalani, a Toronto-based spokesman for the businessman, did not immediately respond to a request for comment Tuesday.

Ms. Melchers said the Crown has disclosed evidence in two separate waves so far, one in July and the other in November. She said she had been informed there would be a third and fourth wave of evidence submitted and that it would include unspecified documents obtained from Royal Bank of Canada. About 80 witnesses have also been identified, she said.

Ms. Melchers said although the AMF has released mounds of evidence, it has failed to properly lay out the factual basis for charges against her client and still refuses to disclose specific details. She said that will undermine her client's right to a fair trial if it isn't remedied.

"Today, nine months after charges were laid, it's clear that the AMF's evidence is incomplete," Ms. Melchers told the court. "We don't know the scope of what we should still expect."

She said proper disclosure should include precise dates the alleged actions occurred, not just date ranges, as well as more specific information on stock trades and alleged aliases used. She said, whereas the prosecution in other securities cases across Canada outlined detailed summaries against people accused, much of the case against Mr. Baazov so far contains little more than a copy-and-pasting of the relevant infractions.

A lawyer for the AMF was scheduled to provide a rebuttal in court later Tuesday.