Companies that "lie" to investors and get away with it

[Russ Smith]

I know frivolous shareholder lawsuits are VERY common but it still disturbs me how often companies do this.

Awhile back I foolishly bought ZNGA(Zynga) and a few days later they announced a big layoff. I eventually got out ahead because they hired a new CEO away from Microsoft. That event, and repeated talk from ZNGA they were getting into online gaming and were going to get a US gaming license essentially allowed me to sell at a slight profit and get out.

Today they announced earnings, big miss, and then announced they're abandoning plans for the US gaming and essentially admitted it had been a pipe dream all along.

there had been lots of insider selling which is precisely why I sold when I did, that's always a bad sign IMO.

So basically the stock went down, they talked up gaming, hired a new CEO to drive the stock up, sold off, and then told the truth. it's down about 15% after hours.

 

[jf-08]

I toyed with Zynga a bit.

Bought at 2.739 and 2.306, sold @ 5.

But bought back at 2.735 but dumped it at 2.5 and took a little bit of a loss on the initial gains because this wasn't smelling right to me.

 

[Russ Smith]

I toyed with Zynga a bit.

Bought at 2.739 and 2.306, sold @ 5.

But bought back at 2.735 but dumped it at 2.5 and took a little bit of a loss on the initial gains because this wasn't smelling right to me.

Yeah I've bought and sold it 2-3 times in my IRA in the last year. Always made a little profit.

What irks me is Pincus essentially lied, he made this big hubbub about gambling to get the stock up so that his execs could sell, because he was losing key execs. Then he pulled the rug out from under people holding. I sold out 3-4 weeks ago so I made a slight profit but lots of people bought in on the gambling stuff and it's pretty clear they didn't really intend to do it.

Mattrick the new CEO hasn't been there long enough to have pulled that plug on his own IMO.

Pincus has a history, he's the guy that violated a rule and sold shares when he was still locked up. They had somehow written their policy so key execs were allowed to sell during the lockup. Apparently the SEC ultimately decided it was ok and didn't prosecute.

 

[jefftheshark]

There is a pervasive atmosphere of lawlessness right now. An AG who hasn't prosecuted a single financial criminal only adds to this perception.

The Enron guy must be pissed off as hell. His only mistake was starting his criminal career way too early

JTS

 

[Russ Smith]

There is a pervasive atmosphere of lawlessness right now. An AG who hasn't prosecuted a single financial criminal only adds to this perception.

The Enron guy must be pissed off as hell. His only mistake was starting his criminal career way too early

JTS

Pincus is realy a piece of work, I really hope he does something useful with all that money he swindled people out of.

I'll never understand how simply wording a stock plan differently allowed him and other execs at Zynga to sell stock during the initial lockup after the IPO and get away with it. But the SEC investigated and did nothing so apparently they ruled because they complied with the company plan, it was ok, even though most people assumed lockup means lockup not well execs can sell just not regular employees.

I guess that's how the rich get richer.

I'll never touch ZNGA again though, completely immoral company execs IMO.

 

[Gaddabout]

What's really frustrating is Zynga had the keys to the money printing machine. They just didn't have the ambition to follow through. Their games were all carrot-and-stick, no actual emotional payoff. People got tired and gave up -- and also got wise to it. Other Facebook/SM gaming companies have figured it out. Zynga just assumed they had done what they could and never bothered to investigate what it was they had.