AFP
Snapchat’s social media parent, Snap, Inc., seemed headed for a $5 billion IPO until a former employee alleged in a conveniently timed lawsuit that the company misrepresented its financial position and pressured him for proprietary secrets about his former employer, Facebook.
Anthony Pompliano’s complaint claims that he only ran Snapchat’s “growth and engagement team” for 3 weeks before he was terminated. His lawyer, according to the Los Angeles Times, said: “Mr. Pompliano was terminated because he refused to participate in a scheme to deceive the public and artificially inflate Snapchat’s valuation in anticipation of its” initial public stock offering.”
The accusations appear to allege that Snap, Inc. was seeking to violate the United States Securities Act of 1933, referred to as the “truth in securities” law. The law has the dual objectives of requiring that investors receive financial and other significant information concerning securities being offered for public sale; and prohibiting deceit, misrepresentations, and other fraud in the sale of securities.
Snap, Inc. spokeswoman Mary Ritti said in a statement that the complaint is without merit: “It is totally made up by a disgruntled former employee.”
Breitbart News reported in late December that with “2016 being the worst year for initial public offerings (IPOs) since the 2007-8 financial crisis,” Silicon Valley was hoping Snap, Inc. as the company behind the popular chat app’s $25 billion “unicorn” private market valuation, would renew excitement for tech deals by raising $5 billion in a January.
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