Zynga Now Under Investigation For Cashing Out Before Shares Slumped

    July 27, 2012
    Zach Walton
    Comments are off for this post.

Well, that didn’t take long. We brought you word this morning that Zynga CEO Mark Pincus and other insiders including Google cashed out on Zynga stock back in April before the company’s shares fell to the abysmal depths that they’re at today. On the suspicion that some less than honest dealings had taken place, multiple law firms are now opening investigations into the game developer.

According to Kotaku, at least five law firms are now openly investigating Zynga. They will be investigating claims that the company violated federal securities laws and breaching fiduciary duty. If they find that to be case, Zynga could face some pretty large class action lawsuits from their investors.

The current law firms that are targeting Zynga include Schubert Jonckheer & Kolbe, Newman Ferrara, Johnson & Weaver, Wohl & Fruchter, and Levi & Korsinsky. In even worse news for Zynga, some of these law firms have a lot of experience in winning class action lawsuits against video game publishers including EA and Sony.

If any of these law firms find that Zynga was up to no good, it could lead to massive class-action lawsuits from investors. That wouldn’t be good for Zynga as the company is already beaten to the lowest they have ever been.

As we saw yesterday, everybody involved in the social space saw deep cuts into their share prices. Add on to that the fact of Facebook being so close to Zynga and you have a recipe for disaster. It will be a while before either company sees their shares improve. We’ll keep watch over the coming months to see if Zynga can pull itself out of this mess.

  • Munir alfhaid

    True, I’ve bought the offer buy and get 100% free for the price of …… , and I paid double, many times.
    Complained , but , no response .

  • http://www.LAokay.com Steve G

    I wouldn’t be surprised if the stock price continues to do poorly that Facebook doesn’t just buy the company. For what the company is valued at and how much revenue it generate both for itself and Facebook, it would make sense for Facebook to do that, at least in my eyes.

  • Dave

    You can’t use the law against Jews. They own the system. Look at MG Global and JP Morgan. They stole millions in client money. It is out in the open. But no one goes to jail.

  • Bob m

    Why law firms – Shouldn’t this be a SEC investigation?

    • Steve G

      I agree, however most lawyers do not wait until the SEC takes action when there is money to be made on a class actionable lawsuit. Remember, the lawyers can file suits and then run around and sign up all the investors to which some of them can choose to opt out. Usually when an attorney tells you as an investor of a company that commits fraud or illegal activity that harmed you financially or otherwise, you’re usually going to just sit back and wait for a check to arrive when there’s a settlement or they’re found guilty and made to pay up anyways. After all it’s not costing you a dime if they loose the case, and the SEC can still file whatever criminal charges it likes at any time they so choose.

  • SD5150

    So web pro news wont publish my comment but will allow anti-semitic hate speech??!? Nice job moderators….

  • http://cass-hacks.com Craig

    Has everyone forgotten the bursting of the .COM bubble?

    Why are so many willing to throw good money after bad?