FarmVille Developer Zynga Accused of Insider Trading

[exfileme]

Zynga execs may have dumped their stocks on purpose before tanking on Thursday after a disappointing 2Q12 announcement.

FarmVille Developer Zynga Accused of Insider Trading : Read more

 

[lahawzel]

"It’s starting to look more and more like a fad"

It took them until now to realize it?

 

[Pinhedd]

I wonder how much they charge for tiny virtual violins

 

[Cazalan]

Zygna helped Facebook make a lot of money too, so both are going to tank.

 

[s3anister]

and the world keeps turning...

 

[memadmax]

Fad is correct.

 

[olaf]

OH MY GOD , How ever will i ever go on now ....

 

[bad_student]

Game developer Zynga, who seemingly sat upon a mountain of cash for years thanks to ...

 

[bad_student]

Game developer Zynga, who seemingly sat upon a mountain of cash for years thanks to ...

Mad libs time! Finish the sentence. Here are my attempts:
1) Unctuous body practices and unhygienic business practices.
2) Copy-pasting the work of others.
3) Stripping the company of needless innovations like 'innovation'.
4) the land of Mordor, where the shadows lie.
5) Making bad games.
6) Copying bad games.
7) Wiping WoW PUGs.
8) Throwing its keyboards across the rooms in spectral displays of telekinesis and teenage angst.
9) Watching Star Trek reruns.
10) Algebraic socks and promethean magic.
11) Those blasted kids, without whom he would've gotten away!
12) Cheating and not prospering simultaneously while sequentially simulating sums of simian smirks in its salty salty sandwich.
13) Being a materialistic game company in a materialistic girl.
14) OJ Simpson.
15) Orange juice.
16) Being the illegitimate offspring of something evil and something fraudulent.
17) Dirty dealings, shady business practices, and bears-- oh, my!

 

[gigantor21]

What, so it ISN'T the new face of gaming? Thank God. Maybe now my nightmares will stop...

 

[epdm2be]

Zynga who?
Why is this news?

 

[face-plants]

It's news because Zynga is a relatively popular company that has millions of gamers on it's many games. I'm sure I'm not alone in enjoying the drama and watching them flounder. After failing to find enough ways to milk their customers to stay afloat, the top execs have milked their less-than-a year-old IPO dry and are gonna pay the price for basically stripping $500 million out of their company. Money that could have gone to actually improving or developing new products. They're definitely a 'success story' in the US now; Golden parachutes for the top execs just like the best banks!

 

[timw03878]

There's books that totally debunk the fallacy of insider trading being "evil"

there's benefits that nobody even begins to consider.

 

[JohnnyLucky]

Geez! The execs cashed out in a hurry. They just took the money and ran.

 

[blazorthon]

[citation][nom]otacon72[/nom]The fact these idiots didn't think dumping all that stock would raise any red flags shows how dumb they are.[/citation]

Only if that wasn't part of their plan. We might never know.

 

[jalek]

Federal security laws? The US has those?
Who knew?
Next thing you know, there will be trust-busting laws to prevent "too big to fail" from usurping the power of the elected.

 

[csbeer]

[citation][nom]timw03878[/nom]There's books that totally debunk the fallacy of insider trading being "evil"there's benefits that nobody even begins to consider.[/citation]

Did you just fall off the turnip truck? If a gross redistribution of wealth from the equity buying public to Zynga executives and insiders is "not eveil and benfits society" then yeah, your statement is correct. Sadly, the money is going to go from the greedy execs to lawyers next, instead we should just throw some of the pinkish nerds in jail.

 

[magnumfinger]

[citation][nom]timw03878[/nom]There's books that totally debunk the fallacy of insider trading being "evil"there's benefits that nobody even begins to consider.[/citation]

If insider trading was legal and "good" then you should rewrite the storyline of the movie Wallstreet 1 and create a third sequel to it -- and hire Pincus for the leading role.

 

[Kami3k]

[citation][nom]timw03878[/nom]There's books that totally debunk the fallacy of insider trading being "evil"there's benefits that nobody even begins to consider.[/citation]

All of them written by people who have done insider trading do doubt...

 

[azxcvbnm321]

They are trying to determine if Zynga misrepresented or failed to disclose certain types of information, including the declining number of users, delays in launching new games, and its dependency on Facebook, before selling shares.

Sounds like to me just greedy law groups trying to make money from a shakedown where they get paid to go away because fighting an BS claim can be more costly.

Executives and people working at Zynga selling stock IS NOT INSIDER TRADING! It is a given that these people know more about the company than the general public. That's why there are numerous regulations over how they can sell stock. They have to declare months in advance any planned stock sales with their broker. There is also a lockup period where they can't sell stock directly after the IPO for X amount of time. Generally the CEO and executives tell their brokers to sell stock after the lockup period ends. So if the lockup period is 6 months, then executives will tell their brokers, at the time of the IPO, to sell 6 months in the future. That's the way it works.

Insider trading is when someone not working for the company gains information from insiders and uses that to trade. Let's say my friend works at Zynga and he tells me the company is doing horribly. I then sell my stock or short the stock. That's insider trading. If my friend at the company wants to sell, he has to go through HR which has rules that get tougher as you go up the leadership chain.


Selling personal stock doesn't "strip" the company, it merely goes from one private person to another. For each sale there has to be a buyer on the other side. The company is not effected. An executive buying company stock doesn't add to the company either. It goes from his private funds to another private individual. Only when the company issues stock or buys back stock does that effect the company's finances. The company already received its investment money in the IPO. Whatever happens to the stock on the markets after that doesn't effect the company's funds.

 

[p05esto]

Facebook is headed the same, as with Twitter and the rest of the social lame stuff. BORING NOW.

 

[shqtth]

haha suckers for investing in zynga. dumb people deserve to loose their money.
If the investors did their research they would see social networking games are a fad and dying, so you can say all you want, but the investors were brain dead.

Al thought I don't think its cool that they sold off all stock cleaning out the company so the company can't grow as it as no stocks itself to sell. they gave too much stock to the nerdds and not enough stock to the company to raise funds.

Also we are only talking about a 10million dip in sales they still made 330 million thats crap loads for stupid ass game..3% dip in sales. big deal.. very small, but my question is how the hell did the end up with a 22million loss? are they buying drugs with all that money? because i know they are not using the money to pay good programmers as their games suck. Something smells.

 

[blazorthon]

[citation][nom]shqtth[/nom]haha suckers for investing in zynga. dumb people deserve to loose their money.If the investors did their research they would see social networking games are a fad and dying, so you can say all you want, but the investors were brain dead.Al thought I don't think its cool that they sold off all stock cleaning out the company so the company can't grow as it as no stocks itself to sell. they gave too much stock to the nerdds and not enough stock to the company to raise funds.Also we are only talking about a 10million dip in sales they still made 330 million thats crap loads for stupid ass game..3% dip in sales. big deal.. very small, but my question is how the hell did the end up with a 22million loss? are they buying drugs with all that money? because i know they are not using the money to pay good programmers as their games suck. Something smells.[/citation]

I'm fairly sure that the purpose of companies such as Zynga, Facebook, and others like them is strictly get richer fairly quick schemes for the people controlling the companies (maybe not always quick, but I think that the point is made well enough).

Look at Zynga. All of the directors and such probably sold everything months ago. The company lost money, but they defintiely didn't. Heck, with Facebook, some of their directors made over a billion dollars by selling all of their stock. Mark Zuckerberg, as the CTO of the company, gave them all (including himself) the stocks that they sold back to them for free, so they basically sold and made billions altogether and got all that they sold given back for free. Mark himself sold his stock for something like 1.1B dollars (that's ignoring tax; he got something like 700 or 800 million USD of it).

These companies aren't using business strategies that are going to let them keep going up. They went for an IPO that is far above what they should have for them and then sold ASAP. They literally seemed to have done it strictly to make themselves billions. I'm no expert in this, so I can't say that I know even most of the details around it, but it doesn't take an economical genius to look this up on yahoo finance and ameritrade.

 

[csbeer]

[citation][nom]azxcvbnm321[/nom]Sounds like to me just greedy law groups trying to make money from a shakedown where they get paid to go away because fighting an BS claim can be more costly. Executives and people working at Zynga selling stock IS NOT INSIDER TRADING! ....[/citation]

I agree with what you said, but IMO what you described is a mass redistribution of wealth from the general public to sophisticated insiders, execs. and the finance industry. Society does not benefit one bit from the $ going from the idiots who bought the stock to sellers, yet those sellers stand to "make" over half a BILLION dollars. It's just icing on the cake that you can pass judgement on the lawyers as greedy (which they are), yet explain away the machinations of the marketplace as standard operating procedure.

 

[blazorthon]

[citation][nom]csbeer[/nom]I agree with what you said, but IMO what you described is a mass redistribution of wealth from the general public to sophisticated insiders, execs. and the finance industry. Society does not benefit one bit from the $ going from the idiots who bought the stock to sellers, yet those sellers stand to "make" over half a BILLION dollars. It's just icing on the cake that you can pass judgement on the lawyers as greedy (which they are), yet explain away the machinations of the marketplace as standard operating procedure.[/citation]

TBF, whether or not they are standard operating procedure these days doesn't really have an effect on whether or not they are morally sound. For example, if killing someone for disagreeing with a government (regardless of what the disagreement is over) peacefully was standard operating procedure for that government, I don't think that it can be said to be morally sound just because it is standard. I think that you're correct in that the mass redistribution of wealth from the general public to the insiders is morally wrong, but I don't see how the morality of that action depends on whether or not it is standard operating procedure for the market.