Business

Zynga sued on stock sales

Online social games maker Zynga was sued by a shareholder after execs were allowed to sell stock early, while sales by lower level employees and outsiders were blocked.

Wendy Lee, a former Zynga product manager, contended that after a Dec. 16, 2011, initial public offering, substantially all shareholders, including all officers and directors, were barred from selling shares for 165 days.

That “lockup” was waived the following March for some execs, who sold more than 40 million shares in a secondary offering, Lee said in a complaint made public yesterday.

While those higher-echelon officials were allowed “to cash out early,” Zynga’s board “did not extend the same opportunity to Zynga’s non-executive and former employees,” Lee said.

Execs “nearly doubled the proceeds from their sales” by being allowed to sell early. By the time the lockup on other investors expired, “Zynga’s share price had dropped 49.3 percent,” Lee said.

Stephanie Hess, a Zynga spokeswoman, declined to comment on the lawsuit.