Earlier this week, a judge ruled (PDF) that Zynga would have to face a revised lawsuit over allegations that it defrauded investors by offering overly-zealous news about the company’s future at the time of its Initial Public Offering (IPO). The investors allege that Zynga knew that an upcoming platform change at Facebook would decrease the company’s ability to rake in revenue, but executives concealed that information. After the successful IPO, the complaint says, the executives sold off their Zynga shares before the stock price collapsed . The investors applied for a class-action lawsuit in July 2012 , just after Zynga shares tumbled to $3 per share from a price peak of $15.91 per share. US District Judge Jeffrey White dismissed an earlier version of the lawsuit a year ago, but ruled that the game company would have to face a revised complaint from the same investors. Although Zynga denies the investors’ claims, the plaintiffs say they have at least six confidential witnesses who had access to daily reports on Zynga’s bookings before the IPO. Those witnesses say the company was in decline before the IPO. “Although the company may have reported large bookings after the fact,” the judge’s order writes, “Plaintiff contends that the bookings declined significantly during the class period and yet Defendants continued to represent to the public that the bookings were strong.” Read 2 remaining paragraphs | Comments
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Zynga investors can sue FarmVille creator for alleged IPO fraud, judge says
