Law firm accuses Zynga of failing to disclose key data

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By Reuters | Updated: 1 August 2012 11:55 IST
A California law firm representing a stockholder has filed a class-action lawsuit against Zynga Inc , accusing the game publisher of failing to disclose a rapid decline in users and revenue.

The social gaming giant behind "Farmville" and a plethora of other Facebook games last week stunned Wall Street by reporting quarterly results well below expectations and slashing its 2012 revenue forecast. Its stock plummeted 42 percent to a record low and analysts cut their recommendations on the stock.

Zynga's results also cast a pall over Facebook Inc because the No. 1 social network relies on Zynga for roughly 15 percent of its revenue.

In its lawsuit submitted late on Monday, the law firm Kessler Topaz Meltzer & Check LLP accused Zynga of concealing declines in users and the sale of virtual goods, the company's prime revenue source.

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Zynga declined to comment.

Its shares fell 3 percent to $2.91 in morning trading.

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Copyright Thomson Reuters 2012

 

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