David Baazov Allegedly Hid Brother’s Shareholdings

David Baazov is faces charges that include insider trading, securities fraud, and falsifying investor information. Now the Autorite des Marches Financiers (or AMF) the Canadian financial regulators – equivalent to the US’s SEC or UK’s Financial Conduct Authority – are leveling new charges against him which will once again lengthen David’s potential rap sheet.

In a new twist in the case that keeps on giving, David Baazov, may not have been the sole owner of Amaya as he claimed.

Essentially, David Baazov was listed as the sole owner of Amaya back in 2007. However, from an agreement the AMF claim to have discovered on Josh Baazov’s phone it would appear David was holding up to 75% of those shares for Josh Baazov, his brother, and Craig Levett. David was listed on the shares as owner but the agreement shows that he was simply the Josh and Levett’s “nominee shareholder” on those 75%.

In practice this would mean that Josh and Levett would have had voting power and partial control of the company. 

This is not good for David Baazov, since it would make the license applications, in which he claimed the owners of Amaya had no criminal convictions, inaccurate, because it turns out his brother Josh has lived a life. In fact Josh has been done for cocaine possession in the past, and recently was made to pay out $77,000 in compensation to victims of his telemarketing fraud. He is not the kind of person who instills your average regulator, or indeed, venture capitalist with confidence.

It should be pointed out these charges have not been tried in court yet and the Baazov’s lawyers did release a counter-statement:

“Through prejudicial leaks, false declarations and persistent insinuations, this affair is transformed into interminable fishing. The AMF continues to manage this case in the court of public opinion because it can not win in court. David never held Amaya shares for anyone other than himself.”

It should also be noted that nominee shareholders’ are not uncommon and often serve as a way to protect the privacy of owners and to allow the nominees specific powers like voting on their behalf. 

However, most regulators nowadays look straight through nominee agreements to the de facto owner, not whoever is listed on the share certificate. Which is what it would appear Josh himself was doing, as there are reports that he claimed to represent Amaya on various occasions.

Wherever this case goes next. We’ll be watching closely.