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Zynga Insiders Dumped 43 Million Shares Before Stock Crashed

It's been a bad week for Zynga. It's stock took a dive earlier in the week, falling over 41 percent to a low of $2.99 (at the time of this writing, it is trading for $3.17 a share). But what's really notable is the fact that many large investors in the company -- including founder Marc Pincus -- had recently cashed out huge amounts of Zynga stock, to the tune of $516 million.

In April, which as Yahoo Finance notes is in the same financial quarter that the company's poor earnings prompted its stock to fall, Zynga held a "secondary stock offering." This offering consisted solely of stock owned by Zynga executives and well-heeled investment houses. All told, they sold off 43 million shares at $12 a share -- shares which are now trading for a little over $3.

Marc Pincus himself sold 16.5 million shares for over $200 million. Zynga CFO David Wehner sold 386,000 for $4.6 million, and former EA and Microsoft exec and current Zynga COO John Schappert sold 322,000 shares for $3.9 million.

While there is no evidence of wrongdoing as yet, it certainly looks suspicious when so many company insiders dump stock in the same quarter that the company's financials go south.

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Comments
  • Sounds like shady doings to me.
  • Honestly no surprise here, just like casual games in general. A quick cash in with no prolonged sense of achievement or worth.
  • That's business I guess. Try to make as much cash as you can by selling off stocks, before telling your stockholders about financial troubles.
  • It never looks good when someone dumps stock before it tanks. People are going to be suspicious no matter what.
  • Hmm... do I smell an investigation?

    I am not surprised, knowing what we know of Zynga business practices.  Hopefully, if they are indeed guilty, they get the book unlike so many other Wall Street execs.

  • This is about as suspicious as a bunch of people cashing out shares to a company right before its stock takes a dive. Wait... actually this is exactly what they did so I can't even make an analogy for this.
  • There's no doubt that this is alarming. Hope that its just a coincidence. However, its looks unlikely considering the amount of red flags that have now appeared. That many big shots selling that many shares right before the stocks tank... how convenient. I've got to call foul play on this one.
  • It does sound like possible insider trading. I wouldn't be overly surprised either. The company used such blatant and cheap get rich quick business tactics that did not set them up for longevity. Hopefully they treated their employees well as those will be the ones taken the hit, not the millionaires.
  • That's a perfect picture for this article
  • oooooo looks like some people are going to go to jail! insider trading is illegal, almost as illegal as there crap games BOOOM!!!

  • That picture of Marc is perfect for this article. Great job Matt.
  • Whats Zynga?? Oh yeaH, nothing. Who cares
  • This does look sketchy, but it's possible that things just worked out really well for them, like when the MySpace founder sold MySpace for $250 million but Facebook ended up rendering it obsolete just a couple of years later, but somehow I don't think that's  the case.

  • this is really shady

  • They all got out cuz they realized it was a good idea, this company sucks ass.
  • "It's been a bad week for Zynga." What do you mean by bad week?? Zynga is the dumb company that made that dumb Draw Something game, which honestly makes no sense. So in actuallity, it's a bad week for Zynga, but a great week for people who hate Zynga so much.
  • why is there a picture of your Editor in Chief at the top of this story?
  • Oh Zynga, how you never fail to seem more evil than ever.

  • Martha Stewart Says: "Dumping your stocks in anticipation is called insider trading and that's a bad thing"

    After all she should know.

  • Seriously, I look at that guy I wanna pee on his face, smug bast*ard
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