There has been debate as to whether or not Pineda throws with what is normally referred to as the "inverted W". Even if he does not pitch with the "inverted W", there are some major concerns with his delivery. For those who are not familiar with the "inverted W" it is a delivery where both the pitching arm and the glove arm are elevated above shoulder level, with the pitching arm slightly behind the shoulder. This causes a timing issue where the pitchers front foot lands before the pitching arm in the proper position. For more on the inverted W and why it is detrimental to pitchers, I highly recommend taking a look at Chris O' Leary's website.
O'Leary does a great job of explaining the "inverted W" as well as other pitching deliveries. He also takes a look at why Pineda's delivery could be an issue in the future.
What concerns me the most about Michael Pineda's arm action is that he seems to show the ball to Center Field. Many people teach this, but it's both unnecessary and potentially injurious.
If you look at high speed clips of Michael Pineda, you can see his PAS forearm rotate around at the last second as gets his hand into position to throw the ball. That late torqueing can create a timing problem and can increase the load on both the elbow and the shoulder.
O'Leary goes on to explain that Pineda's delivery creates what he calls "hyperabduction", a term for when the pitching arm is elevated above the shoulder. This could lead to rotator cuff and labrum injuries, similar to the injury that has sidelined Pineda for the 2012 season.