At the close of business on Thursday, Amaya Gaming stock was trading at 35.06, an increase of nearly 400% from the stock’s value in mid-May (around 7/share), when the first rumors of a potential major acquisition emerged, an acquisition that turned out to be PokerStars.

Needless to say, early Amaya investors had to be feeling really good as they sat down for dinner on Thursday evening.

And then all hell broke loose.

A late-breaking report on Thursday evening by Forbes’ Nathan Vardi linked Amaya to an ongoing investigation by the Autorité des Marchés Financiers (AMF), the financial regulators for the Province of Quebec.

Speculation was rampant across the Internet, and despite issuing a brief statement to Forbes (which was in the original article), Amaya later issued a lengthier statement on what was at the time termed a “raid.”

In the statement, Amaya indicated the investigation was in regards to trading leading up to their purchase of PokerStars, but to their knowledge, “does not involve any allegations of wrongdoing” by Amaya:

“To provide clarification on a media report, Amaya Inc. (the “Corporation”) (TSX: AYA) confirmed that the Corporation and its officers are cooperating with the Autorité des marchés financiers, the securities regulatory authority in the Province of Quebec (the “AMF”), in an investigation with regards to trading activities in Amaya securities surrounding the Corporation’s acquisition of Oldford Group in 2014.

To the Corporation’s knowledge, this does not involve any allegations of wrongdoing by the Corporation. Amaya will continue to cooperate, if and as requested, consistent with our practice to always cooperate with regulatory authorities.

The Corporation will continue to monitor the investigation if and as it proceeds. The investigation has had no impact on Amaya’s business operations, employees or companies.”

A routine investigation

Considering the size of the Amaya/PokerStars deal, and the fact that the sale was a historic reverse acquisition, and one that required billions of dollars of capital to be raised, an investigation isn’t all that surprising. The scope of the deal, coupled with the stock surges prior to the official announcement, almost made an investigation inevitable.

In the run-up to the official announcement of the sale of PokerStars’ parent company The Oldford Group to Amaya Gaming, Amaya stock rose over 100% and volume was up over 200%. Even before the first rumors that PokerStars might be Amaya’s target, the stock had already jumped from 7/share to 10/share.

It would have been more surprising if there wasn’t an investigation into the $4.9 billion sale of a private company to a small publicly traded gaming company valued at around $177 million.

Along these same lines, Canaccord spokesperson Scott Davidson used the term “routine request for information” when describing the investigation in a statement given to TheStar.com.

And on Monday, Cannacord Chief Executive Officer Paul Reynolds sent a memo to the company’s employees which stated, “I can assure you that Canaccord Genuity is not the subject of this investigation, nor is any member of our capital markets group. This is strictly a request for information related to individual trades in our client accounts.”

Additionally, as Chris Grove of OnlinePokerReport.com noted, the initial Forbes article and a subsequent follow-up originally contained the word “raid,” this language was later softened to “showed up” and “investigation,” perhaps indicating there was less smoke than was first thought.

Or was there? Despite the public statements, investors still seem leery of Amaya stock.

Anticipated stock fluctuations

Despite their attempts to quell the speculation and tamper down any fears, on Friday morning Amaya stock plummeted, losing 25% of its valuation before the opening bell finished ringing. The stock leveled off and fluctuated between 25 and 30/share throughout the rest of the trading day, first rebounding up past 30, before once again falling back down to around 25, which is where it ended on Friday.

This drop wasn’t unexpected, and there was a glimmer of good news on an otherwise dreary day, as trading of Amaya stock wasn’t halted at any point.

On Monday, the stock started off strong, bouncing back up to over 30/share, before once again dipping down into the mid twenties. At the end of the day on Monday, Amaya stock once again rebounded and was trading at 29.50 at the closing bell; a 3% gain on the day, and perhaps more importantly, a fairly steady day of trading considering the massive fluctuations experienced on Friday.

3% is not the greatest uptick after losing 18% on Friday, but it was a positive sign for Amaya nonetheless.

As trading opened on Tuesday, the stock once again tumbled, losing a further 7% as of 11 AM EST.

You can play along at home with Google’s real-time stock tracker here.

What happens next?

It’s unlikely the full investigation will be wrapped up in the near future, but Amaya seems to already be distancing itself (or at least trying to) from any wrongdoing by its own statements.

Furthermore, the statements from the principles such as the Royal Canadian Mounted Police, who indicated their presence was one of security only and not investigative in nature, and the AMF, who told the Globe and Mail, the search “was part of a wider investigation on which we have no further comment.”

For Amaya, the sooner this book is closed the better, as the company continues to try to make inroads in both New Jersey and California, and regardless of how routine the investigation is, an open investigation into possible securities trading violations doesn’t help their chances with the NJ Division of Gaming Enforcement.