(CN) – A class of investors claims the value of their shares in Amaya Inc., the online poker firm behind such sites as PokerStars and Full Tilt, has been largely wiped out due to an insider trading investigation in Canada.
The investigation by Canadian securities regulators has already caused Amaya’s chairman and CEO, David Baazov, to take an indefinite leave from the company while he responds to the accusations made against him.
Both he and the Montreal-based company have denied the insider trading allegations.
But in a lawsuit filed in Manhattan Federal Court on April 4, lead plaintiff Michael Neuberger says the mere accusations of wrong-doing have caused the value of Amaya shares to plummet 20 percent.
In addition to PokerStars and Full Tilt, Amaya runs several other gaming sites, including Real-Money Online Poker, Real-Money Online Casino and Sportsbook.
So successful have these websites been that Forbes magazine called Baazov “The King of Online Gambling” in 2014 after he pulled off an audacious plan to buy the owner of PokerStars in a $4.9 billion deal.
But last month, Quebec securities regulators filed civil charges against Baazov, accusing him of insider trading in the weeks leading up to the PokerStars deal.
Neuberger says that Amaya, Baazov and co-defendant Amaya CFO Daniel Sebag mislead investors by failing to disclose the CEO “was engaged in an insider trading scheme that involved influencing the market price of the company’s securities and communicating privileged information to third parties.”
When the news came out, Amaya’s share price fell $3.07 per share, more than 21 percent, on heavy trading volume.
In a statement, Baazov said he went on leave because he wanted to “avoid a distraction for the company while he responds to certain allegations made against him by the Autorité des marchés financiers, the securities regulatory authority in Quebec.”
He remains a member of the company’s board.
The recent leak of the so-called Panama Papers, detailing the use of shell companies worldwide, also reveals a possible link between Amaya and a British Virgin Islands company called Zhapa Holdings.
Neuberger is represented by Jeremy Lieberman with Pomerantz LLP in New York.
In his statement, Baazov said, “I am highly confident I will be found innocent of all charges.”
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