Law Firms Investigating Zynga For April Stock Sales

July 27, 2012 -

It hasn't been the greatest week for social games giant Zynga, and the aftermath of dismal earnings for the quarter (the stock has fallen to its lowest levels since going public) and a report that executives in the company dumped a large amount of stocks a few months ago aren't helping matters any.

But the biggest trouble for Zynga is the reaction from investors to a report that company insiders and key investors dumped 43 million shares of stock at $12 a share, raking in about $516 million during the month of April. That report details just how much money top executives at the company and key investors made by dumping the stock, and investors are particularly angry because this all occurred during the recently reported quarter in which the bottom began to fall out from under Zynga. From the report:

•Marc Pincus, Zynga's CEO, sold 16.5 million shares for $200 million
•Institutional Venture Partners, a Zynga investor, sold 5.8 million shares for $70 million
•Union Square Ventures, a Zynga investor, sold 5.2 million shares for $62 million
•Google, a Zynga investor, sold 4 million shares for $48 million
•SilverLake Partners, a Zynga investor, sold 4 million shares for $48 million
•Reid Hoffman, a Zynga investor, sold 688,000 shares for $8.2 million
•David Wehner, Zynga's CFO, sold 386,000 shares for $4.6 million
•John Schappert, Zynga's COO, sold 322,000 shares for $3.9 million
•Reginald Davis, Zynga's General Counsel, sold 315,000 shares for $3.8 million
•And so on...

Ultimately the result of this news is multiple law firms have announced investigations. As of this writing law firms announcing investigations include Schubert Jonckheer & Kolbe; Newman Ferrara; Johnson & Weaver; Wohl & Fruchter; and Levi & Korsinsky.

Schubert Jonckheer & Kolbe is investigating whether Zynga's insiders used insider knowledge when they sold their shares in April, while Levi & Korsinsky is investigating "concerns that Zynga misrepresented and/or failed to disclose materially adverse facts about its business and financial condition."

We will have more on this story as it develops. As of this writing Zynga's stock was trading at slightly above the $3 mark. That's a dramatic fall from the double digits it went for when the company launched its IPO earlier this year.

Source: Kotaku


 
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