Leading Online Casino Brand Rocked by Insider Trading Scandal

Despite their best efforts to create a safe and secure online gambling company, this week saw LeoVegas rocked by the arrest of one of its managers in connection with allegations of insider trading.

LeoVegas promised full support and cooperation, stating:

“LeoVegas Group takes ethical conduct and regulatory requirements very seriously, and we are committed to upholding the highest standards of integrity and fairness. We have and will continue to assist authorities with their ongoing investigation.”

One of the sad realities of being human is the potential to succumb to temptation. This is especially true when the temptation is the chance to pocket large sums of money quickly.

 An Investigation Several Months in the Making

In June this year, the media was flooded with reports that the Swedish Economic Crime Authority (SECA) had begun investigating suspected insider trading. The case revolved around the surprise bid by the MGM casino and resorts group to acquire the leading online casino brand, LeoVegas.

The deal was expected to allow MGM to expand beyond the United States and hit the ground running across Europe, thanks to the impressive work done by LeoVegas in that part of the world.

When the MGM offer was revealed, it was not surprising that more than 90% of the company's board approved the offer. MGM offered to pay €5.85 per share to secure the sought-after online gambling brand, a 44% premium on the operators closing stock price.

In total, the generous offer would see LeoVegas stakeholders receiving a €576 million payday.

 Not All That Glitters is Gold

While most of the industry cheered for Leo Vegas’s good fortune, the Economic Crime Authority was focused on an acutely alarming detail: the share price increase. 

The announcement of a significant industry takeover tends to drive stock prices up. When the potential acquisition comes with a juicy headline announcing a 44% premium on current share prices, interest in the company's stocks increases dramatically.

What SECA had been alerted to, however, was the fact that the casino share prices had seen a sharp 30% increase in the month before the deal was made public. With the general stability of LeoVegas shares, there was no reason for this price hike other than someone with insider knowledge making an early play to line their pockets.

Looking for a Silver Lining

It was announced earlier this week that the local authorities had made three arrests in connection with the case, one of whom was a manager of some sort at the operator.

In a statement to the press, LeoVegas director of communications and public affairs, Daniel Valiollahi, said:

“It has come to our attention that an employee within the company has been notified about criminal suspicion regarding the disclosure of insider information. The employee is neither a member of the executive management team nor the board of directors.”

It is good to know the culprit has been apprehended and justice served. We applaud LeoVegas for doing what they can to ensure any wrongdoing is brought to light.