Unsurprisingly, social gaming corporation Zynga is facing their first insider trading lawsuit, courtesy of New York law firm Newman Ferrara. It seems the writing was on the wall for several Zynga executives, who reportedly cashed out their stock for millions of dollars before the company’s value per share recently tanked in the stock market.
Now, Zynga has been served with legal paperwork by Newman Ferrara, who officially submitted a request to the United States District Count for a trial by jury.
According to the San Jose Mercury News, CEO Mark Pincus and other investors successfully scammed the system when they knew that Zynga’s stock market value would sink dramatically, and wound up making off with $500 million after selling their shares:
Before last week’s earnings announcement, “Zynga had misrepresented and/or failed to fully disclose the true extent to which it had been experiencing a sharp drop-off in users of its most profitable Web games and delays in developing new games to launch on social media platforms,” according to the court filing, which names Pincus and other executives who sold shares in the offering.
So far, seven law firms have announced ongoing investigations targeting Zynga, not least of which being California law firm Schubert Jonckheer & Kolbe. As the world’s largest social gaming company, Zynga has made itself a huge target ever since going public at a self-priced value of $10 per share in December 2011.
Right at this moment, Zynga’s stock value currently sits at $2.93 per share, and has continued to fall ever since peaking in March this year. Are we seeing the end of Zynga before our eyes?
Source: The Verge