Sweating it

14 Nov 2018 By Jennifer Saba Follow @jennifersaba

Some are suing the social-media firm for misleading them before its IPO about competition from Instagram. Now U.S. watchdogs are conducting a probe. Bad conduct deserves punishment. But investors willingly bought stock with no rights in an immature company with lots of rivals.

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The U.S. Department of Justice and Securities and Exchange Commission have subpoenaed Snapchat parent Snap for information about its 2017 initial public offering, Reuters reported on Nov. 13.

The federal inquiries follow a shareholder lawsuit that alleges Snap misled investors about how Facebook’s Instagram would impact Snapchat’s growth.

“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 said in a statement. “We continue to believe the class action's claims are meritless and our IPO disclosures were accurate and complete.”

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