Zynga executives paid the underwriters – which include Morgan Stanley, Goldman Sachs, Bank of America and other high-profile Wall Street companies – roughly $15 million to arrange the early sales, and Zynga the company spent $1 million on legal fees, private jet rentals and other expenses to help the process along. The insiders took $516 million. And then Zynga's stock crashed.
During the artificial sale period, Pincus sold 16.5 million shares and made out with $200 million, Google sold 4 million for $48 million, and Zynga COO John Schappert sold 322,000 shares for $3.9 million, along with other large names and numbers.
Newman Ferrara is the first law firm to file a suit against Zynga and its executives, with Schubert Jonckheer & Kolbe and others investigating the claims as well.
Blodget has a personal perspective on the matter, and he writes, "I know many of these folks personally, including at the company's underwriters, and like and respect them. I think the last thing they would intentionally do is unload stock when they thought it was about to crash - especially when the amount they made in the sale, though huge, is still relative chicken feed for them. Also, all of these folks only sold a fraction of their holdings, so they've been hammered along with the rest of Zynga shareholders by the subsequent collapse.
"But, all that said, wow."