According to the law firm press release, the complaint charges Zynga and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Zynga is a developer of online social games accessible to players worldwide on Facebook and other social networks, mobile platforms and Zynga.com.
The complaint alleges that during the Class Period, defendants issued false and misleading statements regarding Zynga’s business and prospects, including in Registration Statements and Prospectuses for the Company’s initial public offering (“IPO”) and secondary offering of its Class A common stock. As a result of defendants’ false statements, Zynga stock traded at artificially inflated prices during the Class Period, reaching a high of $14.69 per share on March 2, 2012.
Then on July 25, 2012, the Company issued a press release announcing second quarter fiscal 2012 financial results below Wall Street estimates, stating that the Company had experienced a sequential decline in bookings. The Company also substantially reduced its fiscal 2012 bookings and earnings per share outlook, explaining that the prospects for its March 21, 2012 acquisition of OMGPOP, a creator of social networking games and a particularly popular game called “Draw Something,” had dimmed, and that changes to Facebook’s web platform had hurt its results and outlook. On July 26, 2012, the Company’s stock price plummeted 37% in response to the July 25, 2012 announcement of the Company’s financial results, closing at $3.17 per share.
According to the complaint, defendants’ Class Period representations were each materially false and misleading when made as defendants failed to disclose the true facts which were known or recklessly disregarded by them, including the following: (a) the December 15, 2011 Registration Statement for the Company’s IPO failed to disclose that under Zynga’s agreements with Facebook, Zynga game cards could only be distributed and redeemed on Facebook until April 30, 2012, or the true extent of the current risk of Facebook policy changes on Zynga’s bookings prospects and overall financial condition; (b) Facebook, upon which the Company was heavily reliant for users and bookings, had already begun to change its platform and user policies to a degree that would negatively impact Zynga’s current and future bookings metrics and growth prospects; (c) the March 2012 acquisition of OMGPOP and “Draw Something” could not support the increased bookings and financial forecasts issued during the Class Period; and (d) in light of the facts set forth above, the Company did not have a reasonable basis for its fiscal 2012 financial forecasts issued during the Class Period.
On January 22, 2013, the Court issued an Order appointing lead plaintiff and approving the selection of lead counsel. On April 3, the lead plaintiffs filed their consolidated complaint.
On February 25, 2014, the Court issued an Order granting Defendants' Motions to Dismiss, but giving plaintiffs leave to amend their complaint.
On March 25, 2015, the Court issued an Order denying Defendants' Motion to Dismiss.
On October 2, 2015, the parties filed a Stipulation of Settlement. This Settlement was preliminarily approved by the Court on October 27. On February 11, 2016, the Court granted final approval of the Settlement and closed this case.