Investors file lawsuits against Zynga top management for disinformation on performance and stock prices – Part 2

“While Zynga insiders were able to sell their holdings at $12 per share before Zynga’s second-quarter financial results were announced, Zynga’s non-executive employees and other public shareholders suffered colossal losses on their investments,” the suit alleges.

The lawsuits state that Zynga was not clear on the issue that their gaming business was not going booming as before. Moreover, the company was not clear on the situation that the changes made on Facebook had led the users to deviate easily to other gaming platforms.

Zynga develops and markets games like Farmville, Words With Friends, and Draw Something exclusively on Facebook.

Moreover the case also accuses the CEO Mark Pincus and several other executives at the company of the alleged stock trading under the table. The preliminary investigations suggest that Zynga insiders sold 43 million shares of stock in April at $12 per share — making over $500 million. This was done at the point when the company employees and early investors were asked to not to sell their stock.

“We’re hearing from employees, mainly because they’re angry about insider trading and they were locked out of selling their shares” while executives and underwriters were allowed to, Norton says.

In the light of the recent events, COO John Schappert was demoted from the position, a role that focused on reviving growth and earning money from mobile services.

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Posted by Usman Khalid on Aug 2 2012. Filed under Pakistan. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.