Zynga has been hit with the first of what may be many lawsuits filed against them on accusations of insider trading. Law firm, Newman Ferrarra is the first to file suit against the company after it was discovered that top ranking employees sold a majority of their stock prior to the stock price tanking.
Five law firms are now investigating into accusations of insider trading as a result of this early and rather unexpected cashout from the top level employees as Zynga. Newman Ferrara is the first that has filed a lawsuit.
Regular employees were "locked up" from selling their shares while the higher-ups worked the system. In April, select individuals were able to sell an additional $515 million worth of shares at $12 per share, which should not have been allowed as the shares were supposed to have been locked until May 28, 2012. Zynga initially went public at $10 a share in December of 2011.
While CEO, Mark Pincus only sold a fraction of his shares for a "small" profit, other executives sold quite a fair bit more. COO of Zynga, John Schappert, sold 45% of his shares. CFO, David Wehner, sold over 50% of his stock. Needless to say, this is only the beginning.
(via The Verge)
Five law firms are now investigating into accusations of insider trading as a result of this early and rather unexpected cashout from the top level employees as Zynga. Newman Ferrara is the first that has filed a lawsuit.
Regular employees were "locked up" from selling their shares while the higher-ups worked the system. In April, select individuals were able to sell an additional $515 million worth of shares at $12 per share, which should not have been allowed as the shares were supposed to have been locked until May 28, 2012. Zynga initially went public at $10 a share in December of 2011.
The secondary offering in April, technically during the company's second quarter, was the first time that executives like CEO Mark Pincus had a chance to sell their shares. Pincus unloaded 16.5 million class B shares, or about 15 percent of his total holdings. Zynga's chief operating officer and chief financial officer, along with early investors like Institutional Venture Partners and Union Square Ventures, also sold. The banks who acted as underwriters for the April transaction received $15 million in fees.
While CEO, Mark Pincus only sold a fraction of his shares for a "small" profit, other executives sold quite a fair bit more. COO of Zynga, John Schappert, sold 45% of his shares. CFO, David Wehner, sold over 50% of his stock. Needless to say, this is only the beginning.
(via The Verge)