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Justice Deptartment, SEC Seek Information from Snap Over IPO Claims

The investigations are based on a class-action lawsuit filed last year.

Social media and camera company Snap SNAP said Tuesday the Justice Department and Securities and Exchange Commission have requested documents in connection with its 2017 initial public offering.

A Snap spokesman said both federal agencies issued subpoenas for information as they try to determine if the company made improper disclosures to investors before going public in .

The investigations are based on a class-action lawsuit filed last year.

“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 Snap spokesman said in a statement, The Wall Street Journal reported Wednesday.

Law firm Pomerantz LLP filed the suit against Snap two months after it launched the IPO, charging that the company made false and misleading comments about user growth.

The lawsuit said Snap’s stock price fell 21 percent after its first quarterly report, and pointed to claims by Anthony Pompliano, a former Snap growth manager. The suit said Snapchat used inflated metrics during Pompliano’s brief tenure in 2015.

Snap’s initial public offering of $17 quickly jumped on the New York Stock Exchange on its first day of trading. Wednesday, shares of Snap were listed on the exchange at about $6.50.

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