Snap reveals U.S. subpoenas on IPO disclosures

The U.S. Justice Department and Securities and Exchange Commission have subpoenaed Snap Inc for information about its March 2017 initial public offering, the social media app maker told Reuters on Tuesday.

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

The previously unreported federal inquiries follow an ongoing shareholder lawsuit in which investors allege that Snap misled the public about how competition from Facebook Inc’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.”

“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,” the company said.

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. They 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.

Subpoenas can compel parties to provide materials that authorities want to review.