Amaya Inc. (TSX:AYA)(NASDAQ:AYA) dropped to a new 52-week low on March 23 as news hit the wires that CEO David Baazov is facing five charges of insider trading.

What’s the scoop?

Quebec’s Autorité des marchés financiers (AMF) made the announcement after an investigation into trading activity connected to Amaya’s 2014 PokerStars buyout.

The AMF has named a total of 13 individuals who allegedly used privileged information to make nearly $1.5 million in profits.

Baazov made a public statement denying that he has done anything unlawful and plans to fight the charges. The company’s board is standing behind Amaya’s founder and CEO.

Amaya’s shares were initially halted but plunged once trading resumed and finished the day down more than 20% at $14.75 per share.

Other issues

Amaya has been in the spotlight in recent months.

The stock had previously hit the $14 mark near the end of January as worries about legal issues in the United States started to really scare investors. With many analysts saying the stock was absurdly undervalued at that price, Baazov announced plans to take the company private at $21 per share in an all-cash bid. That lit a fire under the stock, driving it back to $20 per share by the beginning of March, and pundits were hoping the bottom had been reached.

Is the sell-off overdone?

Fans of the stock are looking at the company’s 100 million online members and thinking the allegations are not really going to have much of an impact on the day-to-day operations of the business. The charges are a distraction, but they do not target the company, just the individuals.

Baazov said he still wants to go ahead with the bid to buy the company. If it turns out he can’t fulfill that plan, another bidder could easily step up to the plate while the stock is under pressure and take a run at the company. If that happens, investors who have the guts to step in now could be looking at a 50% pop in the stock.

Should you buy the pullback?

Potential investors have to decide how important Baazov is to the future success of the company. He is the guy who founded the business and has the vision to take it to the next level. If Baazov is forced to leave, there is a big question mark as to who could potentially fill his shoes.

Contrarian types who believe in the long-term potential of the stock might want to start nibbling. If you prefer investments that are less volatile, it would be best to look elsewhere until all the smoke clears.

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Fool contributor Andrew Walker has no position in any stocks mentioned.