Law firms target Zynga for alleged insider trading
The lawyers are out in force to look into whether the Farmville maker might have withheld vital information regarding its financial health.
Multiple law firms plan to investigate Zynga CEO Mark Pincus and other people who work at Zynga on insider-trading claims, gamer blog Kotaku noted today.
The maker of Farmville reportedon Wednesday, which caused its stock to plummet. Zynga's shares closed at $3.09 today. On Wednesday, just before Zynga's earnings report came out, the stock ended the trading day at just over $5.
The investigations note that the loss happened after Zynga insiders sold 43 million shares of stock in April at $12 per share, making over $500 million.
The firms are looking to find out if Zynga misrepresented or failed to disclose certain types of information, including the company's declining number of users, its delays in launching new games, and its dependency on Facebook, according to a press release from Newman Ferrara.
The firms plan to determine "whether these insiders were privy to material adverse facts about Zynga's business and financial condition at the time they sold their shares," Schubert Jonckheer's press release said.
Kotaku noted that these are firms that regularly conduct class-action lawsuits against big corporations. We've contacted Zynga for comment and will update if we hear back.