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Washington

Snap says DOJ and SEC are investigating IPO disclosures

Snap Inc. said the U.S. Justice Department and Securities and Exchange Commission are looking into allegations it misled investors ahead of its initial public offering last year.

"Snap has been responding to subpoenas and requests for information made by staff from the DOJ and the SEC," the company said Tuesday in a statement. "It is our understanding that these regulators are investigating issues related to the previously disclosed allegations asserted in the class action about our IPO disclosures. While we do not have complete visibility into these investigations, our understanding is that the DOJ is likely focused on IPO disclosures relating to competition from Instagram."

Snap investors allege in a securities lawsuit in federal court in Los Angeles that prior to its IPO, Snap didn't reveal how much competition from Instagram, the photo-sharing app, was hurting its growth in the second half of 2016. They also say Snap failed to disclose a sealed whistle-blower lawsuit by a former employee who claimed inaccuracies in the company's calculation and reporting of daily active users.

"We continue to believe the class action's claims are meritless and our IPO disclosures were accurate and complete," Snap said in the statement.

A federal judge in June denied Snap's request to dismiss the shareholders' allegations.