Zynga had a really bad quarter in terms of earnings, which led to its stock crash nearly 40% right after it reported its Q2 2012 financials. It also took Facebook’s stock down with it, but that’s another story.
Anyway, just three months before this most recent bloodbath, a number of Zynga insiders including the founders and investors sold off a ton of Zynga stock in a secondary stock offering at around $12 a share. Zynga’s stock price is hovering around $3 right now.
Here’s a list of who cashed out in the secondary stock offering and how much money they made (via Business Insider)
- Marc Pincus, Zynga’s CEO, sold 16.5 million shares for $200 million
- Institutional Venture Partners, a Zynga investor, sold 5.8 million shares for $70 million
- Union Square Ventures, a Zynga investor, sold 5.2 million shares for $62 million
- Google, a Zynga investor, sold 4 million shares for $48 million
- Silver Lake Partners, a Zynga investor, sold 4 million shares for $48 million
- Reid Hoffman, a Zynga investor, sold 688,000 shares for $8.2 million
- David Wehner, Zynga’s CFO, sold 386,000 shares for $4.6 million
- John Schappert, Zynga’s COO, sold 322,000 shares for $3.9 million
- Reginald Davis, Zynga’s general counsel, sold 315,000 shares for $3.8 million
There is speculation that they sold out stock right before the impending crash, as they were privy to the company’s financials which would have indicated that Q2 was going to be worse than they expected, which would mean that they flouted insider trading guidelines by the SEC.
Multiple law firms have announced that they will be investigating the secondary sale for possible insider stock trading violations. The list of firms includes Schubert Jonckheer & Kolbe, Newman Ferrara, Johnson & Weaver, Wohl & Fruchter, and Levi & Korsinsky.
All these firms are well versed in class action lawsuits and have won billion dollar lawsuits against big corporations. Zynga’s troubles may just be beginning, if any of these firms find any evidence of wrongdoing and lead a class action lawsuit against the social gaming behemoth on behalf of its shareholders.