PokerStars-Amaya 2014 Acquisition May Have Involved Insider Trading

MONTREAL - The Ontario Securities Commission has levelled insider tipping and trading allegations surrounding Amaya's 2014 purchase of PokerStars.

The regulator alleges that Benedict Cheng and John David Rothstein of investment firm Aston Hills conveyed undisclosed information in June 2014 about the impending US$4.9-billion deal to help customers recoup some losses from prior investments.

In a filing on Wednesday, the OSC says Cheng, who was president and co-chief investment officer at Aston Hills Financial, "instructed, encouraged and/or suggested" that Rothstein inform those who lost money on other investments promoted by Aston about the acquisition before it was announced.

"Rothstein understood that the purpose of providing them with the material, undisclosed information was to make up for these losses," said the 13-page filing.

Rothstein, who was senior vice-president and national sales manager at Aston Hills Asset Management, then passed along the information to Frank Soave, an investment adviser at CIBC Wood Gundy, the document alleges.

Soave made a net profit of $38,166 or a 63 per cent return after selling the Amaya (TSX:AYA) shares he purchased a day before on the recommendation of Rothstein, who earned a net gain of $5,507 on the trading of Amaya shares, said the filing.

The OSC alleges that Cheng, Soave and Aston Hills Financial CEO and chairman Eric Tremblay made misleading or untrue statements to investigators.

Lawyers for Cheng, Soave and Rothstein declined to comment. Tremblay's lawyer could not immediately be reached for comment.

Hearings are scheduled for next Tuesday and May 4 in Toronto.