Zynga is no longer at the center of a federal lawsuit after a judge dismissed allegations made by shareholders that the games company misled them about its financial prospects, Reuters reports.
The company was accused of inflating its stock price by concealing how a drop in user activity, product launch delays and changes to the Facebook platform could negatively affect its revenue and earnings.
However, a statement from U.S. district judge Jeffrey White describes the accusations against Zynga as failing to include "relevant, basic factual details" to support their claims. A representative for the plaintiffs confirmed plans to amend the complaint in order to "satisfy the court's concerns."
Zynga went public in 2011, but stocks quickly plummeted from a value of $9 billion to $4.14 billion. According to shareholders in the lawsuit, the company gave insiders the opportunity to sell more than $593 million in stock two months prior to the end of a contractual period in which company insiders are forbidden to sell their shares. Shareholders claimed this was done in an attempt to avoid a 75 percent drop in stock price in the following months.
"The court granted our motion to dismiss the plaintiff's class action complaint in the securities litigation," a Zynga representative told Polygon. "We are pleased with today's order and continue to believe in the merits of our defense. The focus for Zynga is on our forward-looking business and delivering on our 2014 goals of growing and sustaining our proven franchises and creating new hits."
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