Not too long ago we talked about how Zynga Games was under investigation after doing some shady stock dealings. Then not too long after, COO John Schappert quit the company without naming a successor, most likely trying to dodge any bullets fired into the company. Then not too long after THAT, EA reported that they are suing Zynga for coping their game, The Sims Social, a move that most people in the community said was a great one. The consensus was that Zynga kept getting away with coping other companies ideas and the moment they crossed EA it was game over. Now we have even MORE bad news.

Today Bloomberg reported that, after an anonymous tip from someone inside Zynga, the company is dolling out stock options to ALL employees in an attempt to prevent a mass exodus from the company.

It looks like the company is on it’s last leg. With the COO gone, and pending lawsuits there isn’t much left for the company who only makes products after stealing IP’s from others.

Stocks for Zynga fell two percent. Closing price is $2.95.

Zynga games, the leader in stealing ideas for social games, had a pretty bad week. Their stock took a colossal hit at the beginning of this week, but that isn’t the only problem they have to contend with.

So with their profits spiraling out of control, a number of investors which include founder Mark Pincus offered a secondary stock offering, which was all shares of their own dumped into the exchange. This was right before the stock took ANOTHER hit and went from $12 a share to just about $3. This of course was good for them as they netted about $516 Million dollars from this firesale. But the high could only last so long.

Marketwatch is reporting that a third party investigation company, Newman Ferra, is looking into these recent goings ons at Zynga. Saying that:

Newman Ferrara’s investigation focuses on whether Zynga misrepresented or failed to disclose material adverse facts about its business and financial condition including, among other things, that Zynga has been: (1) experiencing a rapid decline in user numbers of existing web games; (2) experiencing substantial delays in launching new web games; and (3) entirely dependent on Facebook’s online gaming platform. Newman Ferrara’s investigation also focuses on the 43 million shares of personally held stock sold by Zenga’s executive officers in April at a price of $12 per share for proceeds totaling $516 million. These insider sales were executed during the second quarter of 2012 shortly before Zynga reported terrible financial results for that quarter and prior to the corresponding 40% drop in Zynga stock price.

All I can say is that the time of believing that these non-tangible products like social games or social networks for that matter, have any real world value, is over. More to come as this story unfolds as I am very interested in the outcome. Regardless of what happens, social games are going to get a pretty big change.