About a dozen brokers at the Montreal-area branch of Manulife Securities Inc. are under investigation by Quebec's securities regulator as part of its probe into widespread trading in Amaya Inc. stock ahead of its $4.9-billion deal for PokerStars.
According to people familiar with the investigation, the Autorité des marchés financiers (AMF) is examining the trading activities of the Manulife brokers and their family members at the branch in Dorval, which is west of Montreal.
The identities of the Manulife employees are not known, but sources described the brokers as a closely knit group that frequently socialize and share family ties.
Manulife lists 40 brokers, mutual fund sales staff and managers in the Dorval office, which caters to individual investors. The office is located on the busy Trans-Canada Highway, the same road on which Amaya's head office is located a few kilometres to the west.
Representatives for Manulife and the AMF declined to comment.
Tim Foran, an Amaya spokesman, said neither the company nor its executives had ties to brokers at Manulife Securities.
"Amaya is also not aware of any connection between retail brokers at Manulife Securities and any other employee at the company," he said.
Manulife Securities is the brokerage arm of Canada's insurance giant Manulife Financial Corp., which, according to the latest regulatory filings, ranks as Amaya's 17th-largest shareholder with about 300,000 of the gambling company's shares held in multiple portfolios.
The AMF is the primary regulator in a trading investigation that has attracted the attention of U.S. and Canadian regulators.
That interest resulted from the unusually active trading in Amaya's stock ahead of its announcement last June that it was buying the world's largest online gambling company.
Amaya's stock price and trading volumes on the Toronto Stock Exchange and the U.S. over-the-counter market soared in a 10-week period before the deal was announced in June. The unusual activity triggered a review by Wall Street's self-regulator, the Financial Industry Regulatory Authority (FINRA).
Amaya and its financial, legal and banking advisers have been asked by FINRA to answer questions about relationships or contact with about 300 investors under review. The investors, according to sources familiar with the list, purchased large amounts of Amaya stock or derivatives ahead of the takeover news.
It is believed to be the largest group of investors ever singled out by regulators for inquiries.
Regulators often review large lucky trades ahead of market-moving news, but these lists seldom number more than a few dozen. Those familiar with FINRA's list said it includes a broad cross-section of Canadian and U.S. brokers, fund managers, business executives and wealthy individuals.
The list of Amaya investors does not imply any wrongdoing or that the individuals named are the subject of an investigation.