California Law Firm Investigating Zynga Stock Cash Out, CEO Marc Pincus
400 Kicks

California Law Firm Investigating Zynga Stock Cash Out, CEO Marc Pincus

Social gaming giant Zynga has had quite the tough year since going public in the stock market, with a new development seeing the company under investigation by California law firm Schubert Jonckheer & Kolbe. Zynga CEO Marc Pincus, along with a few other shareholders, made millions of dollars by cashing our their stock just before the company’s value tanked.

Schubert Jonckheer & Kolbe’s investigation hinges on the suspicion that Pincus and other are guilty of inside trading, which could have tipped them off to the right time to sell their own stock in order to maximize their personal gains—typically a federal offense.

As the Penny Arcade Report notes, Pincus sold 16.5 million shares of his own stock for $200 million in April, back when the company was worth $12 a share. A few months later, that stock has dropped as low as $3.09 per share.

The stock’s plummeting value wasn’t hard to predict, but the 43 million shares dumped by company insiders for $12 a share in April is galling. This is the same stock that is now selling for slightly over $3 a share. “In other words, Zynga insiders cashed out at exactly the right time,” Yahoo Finance reported. “In fact, they cashed out in the same quarter in which Zynga imploded.”

It’s a domino effect that’s also taking Facebook’s stock down with Zynga, as the relationship between both companies essentially damages them both. In an ideal situation for Facebook, they could shake Zynga loose if it weren’t for their massive audience base that’s entrenched though their social network.

Business Insider has a full list of the Zynga shareholders who benefitted most from the cash out, including several venture capital groups and Google themselves. At best, it looks extremely odd—at worst, there’s potential for a mass class action lawsuit that could drag out for years and cost millions of dollars in settlements.

Read More...

egmnow.com

Contributor: egmnow.com   Posted: Jul 27, 2012 at 6:49pm
Gaming Category: Gaming News, Mobile
Tags: , , , , , , , , ,

You may also like:

     
 

[qa id=501055]