Zynga faces legal probe over senior management share sales
Lawyers claim $516m cashed in before stock tanked
Zynga's plummeting stock price has brought the attention of lawyers, who have started an investigation into the recent stock dealings by the senior management of the gaming company.
At issue is the sale of 43 million shares of stock by Zynga top brass, netting them $516m in profit. The sales were carried out a couple of months before the financial results were announced that have had such a calamitous effect on the company's fortunes.
"The timing of these insider sales two months before is suspect," Jeffrey Norton, senior attorney at law firm Newman Ferrara tells The Register. "Zynga insiders at the highest level all sold shares at that time."
Norton said that the firm has already been contacted by dozens of investors and is looking to hear from those who bought stock in Zynga between December 16, 2011 and July 25, 2012. The company could be filing a legal case as soon as Monday morning he said.
This is not the first time Norton has been involved in holding companies to account for such dealings. He was part of the team that saw Veritas cough up $30m after it was found to have been cooking its books.
Zynga raised $1bn at its IPO last year, which was then the largest such offering since the floatation of Google. It's shares peaked at over $14 in March but are now trading at a little over $3 and the stock market is showing little enthusiasm for the company after it warned of a tough 2012's trading.
The company did not reply to a request for comment from El Reg. ®