Former Snapchat employee Anthony Pompliano filed suit against the company for allegedly breaking federal whistleblower protection laws and misleading investors ahead of Snap’s initial public offering. Pompliano has previously filed suit in January against the company in L.A. County Superior Court on similar claims but decided to transfer the case to federal court and file for whistleblower protections under Dodd-Frank.
When Snap Inc. began pitching themselves to investors in the lead-up to their IPO, they presented a series of numbers including Daily Active Users, Monthly Active Users, and growth projections to increase their valuation (about $20 billion at IPO).
According to the federal lawsuit, when Pompliano joined Snapchat, the growth figures Pompliano was presented were false. “Throughout the recruiting process, Snapchat represented to Mr. Pompliano that Snapchat had been experiencing double-digit, month-over-month growth in its active user base, and that it had already acquired 100 million daily active users. Both metrics were false,” the federal filing states.
Pompliano further alleges that Snapchat was presenting these falsified metrics to investors, and that when he confronted the “highest levels” of Snap’s management, he was “rebuffed.” The filing claims that “the real reason Snapchat hired Mr. Pompliano away from Facebook was not to build a growth team, but for the nefarious purpose of obtaining Facebook’s confidential and proprietary information, and enlisting Mr. Pompliano to help identify and poach key Facebook employees…” Facebook owns Instagram, Snapchat’s largest competitor.
As to the allegations, Snapchat says it has “reviewed the complaint, and it has no merit. The allegations are totally made up by a disgruntled former employee.” LAist
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