Amaya, owners of PokerStars and Full Tilt, finds itself in the news headlines for all the wrong reasons once again after Rosen Law Firm announced it is filing a securities class action lawsuit against the Canadian gambling giant.
Rosen Law Firm, a global investor-rights law firm, is seeking to recover damages for Amaya investors under the federal securities laws. The lawsuit, of which no class has yet been certified, claims Amaya issued false and misleading statements to investors and/or failed to disclose that:
- Amaya's CEO was engaged in an insider trading scheme that involved influencing the market price of the Amaya's securities and communicating privileged information to third parties.
- Amaya lacked adequate internal controls.
- As a result of the above, statements about Amaya's business operations, and prospects, were false and misleading and/or lacked a reasonable basis. When the true details entered the market, the lawsuit claims that investors suffered damages.
News of the alleged insider trading by Amaya CEO David Baazov broke last week when it became known that Quebec’s securities regulator, the Autorité des Marchés Financiers (AMF), had filed five insider trading charges against Baazov following an investigation launched following Amaya's $4.9 billion acquisition of PokerStars and Full Tilt.
Baazov denies the charges brought upon him, saying in a statement: "These allegations are false and I intend to vigorously contest these accusations. While I am deeply disappointed with the AMF's decision, I am highly confident I will be found innocent of all charges."
The saga took another twist on Tuesday, March 29, when a press release issued by Amaya informed readers that Baazov would be taking a voluntary leave of absence for an indefinite period of time from Amaya Inc. In that press release, Amaya said the paid leave would allow Baazov to "focus on preparing an offer to acquire Amaya and to avoid distraction for the company while he responds to certain allegations made against him by the AMF."
Baazov's comments were similar that that of Amaya, "As always, I continue to be dedicated to doing the right thing for Amaya and all its stakeholders. I believe that stepping down in the short term will help to avoid distraction for the company and its management while I vigorously contest all allegations made against me and pursue my bid to acquire the company."