David Baazov, president and chief executive officer of gaming company Amaya Inc.CHRISTINNE MUSCH/Reuters
David Baazov is stepping back from Amaya Inc., the globally dominant online poker company he built, in a bid to "avoid the distraction" of illegal insider-trading charges recently laid against him by Quebec's securities watchdog.
Montreal-based Amaya said on Tuesday that Mr. Baazov – the founder, chairman and chief executive officer of Amaya – has taken an indefinite paid leave of absence as of Monday so that he can better deal with the insider-trading charges as well as focus on his plans to take the company private.
The move will help "avoid a distraction for the company while [Mr. Baazov] responds to certain allegations made against him by the Autorité des marchés financiers [AMF]," Amaya said.
"As always, I continue to be dedicated to doing the right thing for Amaya and all its stakeholders," Mr. Baazov said in a statement. "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."
Mr. Baazov will remain on Amaya's board. The board has appointed its lead independent director, Dave Gadhia, as interim chairman. Rafi Ashkenazi, the CEO of Amaya's operating business – Rational Group – becomes interim CEO of the company.
Mr. Baazov has denied any wrongdoing in the insider-trading allegations by the AMF, the biggest such investigation in Canadian history. None of the allegations have been proven.
Some analysts have questioned whether Mr. Baazov will be able to follow through on an offer for the company, given the charges he faces and the likelihood of a drawn-out process.
The AMF filed 23 charges in the probe into Amaya's blockbuster $4.9-billion (U.S.) takeover two years ago of Oldford Group Ltd., the owner of the popular online PokerStars brand. Mr. Baazov faces five charges "for aiding with trades while in possession of privileged information, influencing or attempting to influence the market price of the securities of Amaya Inc., and communicating privileged information," the AMF said last week.
Among others charged with insider trading are Benjamin Ahdoot, a childhood friend of Mr. Baazov, and Yoel Altman, an adviser to Amaya.
The AMF identified roughly $20-million (Canadian) worth of trades in its insider-trading case on Amaya, according to information made public by a Quebec court in early January.
According to information in a search warrant obtained by the AMF, much of which remains redacted, the total dollar value of buy and sell transactions on Amaya shares by individuals targeted in the warrant was about $20-million.
Amaya said on Tuesday that Mr. Baazov "recently advised" it that he still intends to make a bid for the company but it has not yet received a proposal.
Amaya's financial adviser, Barclays Capital Canada Inc., was instructed – before the AMF laid charges – to begin contacting other parties who might be interested in doing a transaction, the company said.
A special committee of the board is currently negotiating agreements with "certain of these parties" over terms for access to confidential corporate data, it said.
"The special committee has not made a determination as to whether a sale of Amaya is in the best interests of the company at this time," the company added.
Amaya also said on Tuesday that the special committee of the board has broadened its mandate to include the probing of "additional AMF investigations" into alleged insider-trading activities by people close to Mr. Baazov, including his brother Josh.
Documents released by the administrative tribunal that hears certain AMF applications allege that Mr. Baazov was the "principal source behind a number of privileged information leaks" on acquisitions made by Amaya going back to December, 2010, including the PokerStars deal.
The individuals allegedly pocketed more than $1-million trading on insider information involving such acquisitions as Cryptologic Ltd., Chartwell Technology Inc. and WMS Industries Inc. as well as Oldford Group.
None of the allegations have been proven.
With a file from Nicolas Van Praet