Class-Action Lawsuit Accuses Zoo Entertainment Of Misleading Statements

A recently filed class-action lawsuit on behalf of Zoo Entertainment (indiePub Games) stockholders accuses the company's executives of issuing "materially false and misleading statements" to investors. Faruqi & Faruqi LLP filed the lawsuit [PDF] in federal court for the Southern District of Ohio late last month, accusing Zoo of overstating net income by up to 660 percent and shareholder equity by over $250,000. The accusations stem from an April 15 press release where Zoo admitted that an internal audit had revealed "errors in recording certain transactions in the company's unaudited consolidated financial statements" issued throughout 2010. This April revelation caused Zoo's stock price to plummet 34.3 percent to $2.89 per share in a single day, and the stock has failed to recover significantly since then. The lawsuit seeks unspecified compensatory damages for all investors that held Zoo stock between May 17, 2010 and April 15, 2011. "The Company, the executive officers and their counsel have not had an opportunity to thoroughly review the class action complaint," Zoo said in a statement. The firm, which recently signed with Jason Rohrer to release his Diamond Trust of London title for DS, has previously published games like Minute To Win It at retail and has been running the indiePub Independent Propeller Awards to help the company find indie digital titles to distribute. The news comes as Zoo announces plans to leave the retail game business to focus on digitally distributed games.