Zynga sued over stock sales

Former product manager sues Farmville studio, alleging social game company did not allow lower-level employees to sell stock following IPO.

A former Zynga product manager has sued the Farmville maker. As reported by Bloomberg, Wendy Lee claims Zynga barred non-executives from selling their shares following the initial public offering in 2011, while management was able to cash out.

According to the lawsuit, Zynga executives "nearly doubled the proceeds from their [stock] sales" by being allowed to sell early. When Lee and other non-executives were allowed to sell, Zynga's share value had fallen 49.3 percent, she said.

Lee said she acquired 30,000 shares at $3.805 each and sold them for $3.15, for a net loss of $19,650. She has asked the court to order those who capitalized on "early sales" to pay unspecified damages to her and other non-executive shareholders.

A Zynga representative was not immediately available to comment.

Zynga CEO Mark Pincus recently reduced his annual salary to $1 and established a new performance-based compensation program for top management at the company.

Written By

Eddie Makuch is a news editor at GameSpot, and would like to see the Whalers return to Hartford.

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Discussion

53 comments
SeAzhrei
SeAzhrei

This just in; "Zynga sues Zynga over the sheer Zynganess of it all." News at 11!

Karzovis
Karzovis

Never buy stock in the company you work for.

Rusmurf
Rusmurf

This has been happening with all the big recent IPOs, including Facebook. The stocks are extremely inflated at the intial IPO, everyone important is taken care of, the largest private shareholders and the underwriters. All the small shareholders always get screwed with these type of restrictions on stock sales. Meaning they are never allowed to sell intially, until the stock ends up greatly deflated, exactly like Facebook. It's definately criminal, because the intent is there before the IPO price is even set. Proving it is very hard, and this is another reason small investors should quit throwing money at Wall Street.

wexorian
wexorian

Zynga sued for exsiting in our universe

punkpunker
punkpunker

come on, every single stock sold is every single money to fund them. what kind of BS policy is this, as if you have to pay the devidends after you've profited every single time.

gplayer5
gplayer5

Typical rich people. Screw over everyone else and ruin their lives all for the sake of money. I hope they all burn for what they did to those people.

91210user
91210user

The Zynga politics sound really dumb, you have to be a fool to work for this stupid company!

enartloc
enartloc

the surprising article would be "Zinga didn't get sued this month"

tightwad34
tightwad34

That is so fucked up. I really hope they get completely taken for. This is greed at it's finest(or worst) and makes me sick when things like this happen. The rich get richer and the "little man" gets fucked in the ass, again. Sad world we live in. I am very glad I have morals and remain as humble as I can.

adroge1
adroge1

Of course they couldn't have the little people in the company sell their stocks. If they did, then the execs couldn't make their money when they sold their own stocks.

Killer6b9
Killer6b9

Maybe...just maybe this will make this microtransaction black hole finally disappear......

moleyUK
moleyUK

Zynga, a firm of lawyers with a games company attached?

Yuusha09
Yuusha09

I'm gonna sue you because you jumped off the titanic before me!

JusXice
JusXice

LOL they always get sued that the only thing you hear from this studio always bad news.

ahpuck
ahpuck

I can't remember the last time I heard anything good about Zynga.

NotCeo
NotCeo

I hate Zynga as much as the next person who enjoys games, but this lawsuit seems pretty ridiculous.

---Cipher---
---Cipher---

I feel bad...but I'm not sure if I should... They bought stocks they knew they couldn't sell? That's the whole freakin point of stocks....to sell them...

Zynga still sucks, don't get me wrong, but I don't think I'd ever invest in a guy who says he can sell when he wants to, but I can't....

nurnberg
nurnberg

Let's see Zynga's "achievements" so far :

1-Having a business model based on micro-transactions that rip-off casual gamers.

2-Stealing ideas, concepts and artwork from other companies, basically copy-pasting games with a different name.

3-Create a gaming fad on Facebook, thus creating a huge bubble, and make a IPO with inflated share prices.

4-Cash in the money by selling the shares (that will soon be worthless), thus getting really rich in the process.

5-Prevent everyone except the executives to sell their shares while they are actually worth something.  Let the rest of the employees sell their shares once they are worthless and lost a ton of value.

nurnberg
nurnberg

Wow, that's terrible!  I always knew that Zynga was a company full of immoral people, but now I consider this company a criminal enterprise.

Cypress131
Cypress131

And yet EA won the golden poo award for worst company.

/sigh

Daian
Daian

When you work for the devil you can't be surprised when you get burned.

JoInfo
JoInfo

Zynga never had an original idea ever.

Thrazewolf
Thrazewolf

Zynga doesn't sound like a good company to work for.


d3nR
d3nR

@Yuusha09 No I think this would be "I'm going to sue you for tying me to a pole while the titanic sank"

Mario_VS_DK
Mario_VS_DK

@NotCeo Read it. The person wasn't aloud to sell their stocks while the executives were. And the stock dropped a massive amount.

arc_salvo
arc_salvo

@nurnberg I'm not surprised anymore.  Never did like their games, I found them bland and generic.

TheWizardMagus
TheWizardMagus

@Cypress131 Yeah, but from the perspective of gamers, Zynga always made crap games. EA, however, actively ruins games and studios, like some sort of developer-specific plague. They are dragging down Bioware, for crying out loud.

nurnberg
nurnberg

@Cypress131 In the EA/Zynga feud, I always supported EA 100% of the time.  EA might have questionable business practices, but Zynga are flat out criminals.

Logixyz
Logixyz

@JoInfo Wasn't farmville their original idea or did they steal that somewhere else?

tightwad34
tightwad34

@Riddick123 Ha ha, good one. I was more or less reassuring myself that I am nothing like these coocs. And I will always be myself no matter what anyone else is doing.

NotCeo
NotCeo

@d3nR @Yuusha09 If anything, this is more "I'm going to sue you for finding a way off of the Titanic after we all agreed to go down with the ship".

NotCeo
NotCeo

@Mario_VS_DK @NotCeo the stock price is completely irrelevant when it comes to the validity of the complaint (it can help determine the damages if the case is valid).

The employees which were unable to sell their stock likely bought the stock with the knowledge that they wouldn't be able to sell until a certain date. That's actually common practice.

There may or may not have been some insider trading. They're actually already being sued for that.

JoInfo
JoInfo

@Logixyz Farmville is basically Harvest Moon with money-sucking microtransactions added if you ask me.

tightwad34
tightwad34

@NotCeo I believe  the point is people being treated unfairly without any good or justifiable reason.

Logixyz
Logixyz

@JoInfo @Logixyz Thanks for the info.

Hadn't seen anything like it before so I thought it was an original IP.

I suppose I should have suspected!