Zynga being investigated over stock cash-in

By Andrew Yoon, Jul 26, 2012 5:00pm PDT

Zynga's stock price did not recover from its tumultuous drop last night, as the company announced significantly worse-than-expected earnings. The stock is currently trading at $3.17, about 80 percent below its all-time high of $15.91. A few individuals have made quite a pretty penny, dumping the stock before this week's events, including CEO Marc Pincus.

Obviously, some investors are miffed. Schubert Jonckheer & Kolbe have announced that they are investigating the company on behalf of Zynga stock purchasers, looking for evidence of any misdoing and insider trading.

The investigation will focus on "whether these insiders were privy to material adverse facts about Zynga's business and financial condition at the time they sold their shares."

For example, Pincus sold 16.5 million shares four months ago for a gain of $200 million. Various insiders at Zynga sold 43 million shares of the stock in April, netting over $500 million. Business Insider has a rather sizable list of everyone that profited from April's stock sell.

While the timing does seem dubious, there's evidence to suggest that Zynga insiders did not dump the stock maliciously--if only because many of them are still significant investors in the company. "All of these folks only sold a fraction of their holdings, so they've been hammered along with the rest of Zynga shareholders by the subsequent collapse," Henry Blodget notes.

Still, Schubert Jonckheer & Kolbe are seeking public assistance on their investigation. "If you are aware of any facts relating to this investigation, or purchased shares of Zynga, you can assist this investigation by contacting either Miranda Kolbe or Willem Jonckheer of Schubert Jonckheer & Kolbe LLP at 415-788-4220."

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