Zynga being investigated over stock cash-in
A few Zynga insiders have made quite a pretty penny despite this week's stock crash, including CEO Marc Pincus. Concerns about insider trading have a law firm investigating.
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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Andrew Yoon posted a new article, Zynga being investigated over stock cash-in.
A few Zynga insiders have made quite a pretty penny despite this week's stock crash, including CEO Marc Pincus. Concerns about insider trading have a law firm investigating.-
"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. " - I'm no stock expert but if you're the CEO and you are 'compensated' with million of shares for which you didn't have to pay a penny and sell a fraction of your shares for a $200 million windfall how does that suggest that insider trader didn't occur? So you 'lose' value on the millions of shares you didn't sell, big deal, you didn't pay for them. If I've got this totally wrong please correct me.
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This article would be better with this picture: http://www.summarynewspaper.com/wp-content/uploads/2011/04/mark-pincus.png
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Normally if you are a CEO or other important role in a company and you have a lot of stock you have to announce your stock purchases and sales far in advance of when you make them. That way you can avoid the insider trading concerns.
When a company first becomes public it's pretty common for major stockholders to sell a small percentage of their holdings so they diversify a bit and so they have cash for all the fun things they want to buy :)
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