Snap reveals US subpoenas on IPO disclosures

Snap’s 2017 public offering is coming under scrutiny by the Department of Justice and the Securities and Exchange Commission.

Snap said in a statement to Reuters, it has responded to the government subpoenas and other requests for information.

The federal inquiries follow an ongoing shareholder lawsuit in which investors allege that Snap misled the public about how competition from Facebook's Instagram service had affected the company's growth.

Snap said it believes that the federal regulators "are investigating issues related to the previously disclosed allegations asserted in the class action about our IPO disclosures."

Snap's Snapchat messaging app has posted disappointing user growth since the company's $3.4 billion IPO, and despite above-expectations sales growth and narrowing losses, its shares have tumbled.

Shares closed at $6.71 on Tuesday, down from their initial offering price of $17.

The company described the lawsuit as "meritless" and said its pre-IPO disclosures were "accurate and complete."

It said it would continue to cooperate with the SEC and Justice Department.

The complaint, filed in May 2017 in U.S. District Court in Los Angeles, also alleges that Snap did not disclose a sealed lawsuit brought before the IPO in which a former employee alleged the company had misrepresented some user metrics.

A federal court ordered that whistleblower case to arbitration in April.

The shareholder lawsuit further alleges that Snap misrepresented its use of smartphone notifications and other "growth hacking" tactics to spur Snapchat usage.