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Zynga faces revived fraud lawsuit: Did its execs lie to investors?

In a ruling in San Francisco, U.S. District Judge Jeffrey White ruled that shareholders can pursue claims alleging that its execs took advantage of investors.

Christian Nutt, Contributor

March 26, 2015

1 Min Read

Newsbrief: Yesterday in San Francisco, U.S. District Judge Jeffrey White denied Zynga's motion to dismiss a class action lawsuit against it that alleges fraud on the part of its management, Reuters reports.

The law firm representing a group of investors in Zynga alleges that the company hid the true state of its upcoming game lineup from shareholders, failed to inform them how changes to the Facebook platform would adversely affect Zynga's performance, and overstated the health of its user-base's "declining" transactions.

These allegations coveer the the period between Zynga's December 2011 IPO and the summer of 2012, when it massively shed value in the wake of poor results. In fact, the law firm also alleges that Zynga management took an early chance to "dump" shares of the company on the market before that -- the company's stock price imploded shortly after that sell-off.

This suit is a revival of one that was earlier dismissed by Judge White. 

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