NEW YORK (TheStreet) -- Shares of Zynga Inc. (ZNGA) are lower by 3.79% to $2.66 in early afternoon trading on Monday, as the company's former CEO and current Chairman of the Board, Mark Pincus, is facing a lawsuit claiming he "unfairly benefited" from the sale of $192 million of stock in 2012, Reuters reports.
According to a court ruling Pincus benefited from the stock sale while other early investors were under a lockup agreement, which controls the supply of stock available for trading, Reuters said.
Zynga, a social games services provider, known for its popular FarmVille game, requested that the Delaware Court of Chancery drop the lawsuit, which alleges Pincus and some of the company's other directors violated their loyalty duties to shareholders by voiding the lockup agreement for certain investors, Reuters noted.
Must Read: Warren Buffett's 25 Favorite Stocks
STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.
In March 2012, Zynga's board waived the lockup agreement for Pincus and four directors, which allowed them to sell stock two months earlier than anticipated.
In April 2012, Pincus and the other directors sold their stock during the company's secondary stock offering, at $12 per share, almost double the stock's price when the lockup ended, Reuters said.
Pincus is arguing that the lawsuit should be dismissed since he and his co-defendants agreed to sell only 20% of their holdings. Pincus also argues that the lockup didn't hurt the plaintiff, shareholder Wendy Lee, or other shareholders, since the lockup expiration date did not change for them, Reuters added.