Anthony Pompliano, the former head of Snap's user growth and engagement division who sued the company in early 2017 over its supposed efforts to lie to investors by inflating Snapchat's user metrics, has escalated his lawsuit to a federal court and is now seeking the status of a whistleblower and at least $10 million in damages, according to a new complaint that was filed on Tuesday. Pompliano's legal representatives reportedly filed the complaint with the United States District Court for the Central District of California, asking for their client to be protected by the whistleblower provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Pompliano claims he risked his reputation by coming forward with incriminating information about the Snapchat maker and is thus eligible to take advantage of a mandatory bounty program established by the 2010 law, according to which whistleblowers can receive between ten percent to 30 percent of related litigation settlements.
Pompliano's original lawsuit claimed that Snap smeared his name and tried to blackmail him after he urged the company's top management to stop inflating Snapchat's user metrics in a bid to mislead investors and artificially increase the value of the Venice, Los Angeles-based company ahead of its then-upcoming initial public offering (IPO). The plaintiff is likely using that particular accusation as the basis for escalating the lawsuit and requesting a trial by jury. While the Dodd-Frank finance reform law primarily protects employees of companies who discover their employer's (attempted) acts of fraud against existing shareholders, they can also be applied to future shareholders. Snap Chief Executive Officer Evan Spiegel, Chief Strategy Officer Imran Khan, and Director of Revenue Brian Theisen are the three defendants named in Pompliano's lawsuit that implies they personally had a hand in pressuring the company's former employee into not going public with the allegedly damaging information.
While Pompliano's lawsuit was filed in the run-up to Snap's IPO, it apparently had little effect on the company's initial valuation, with Snap surpassing a market cap of $28 billion on the first day of its life as a publicly traded firm in early March. Even though the social media giant disappointed some investors following its Q1 2017 financial report which significantly affected its market cap, many industry analysts still see Snapchat's parent company as a relatively safe investment. An update on the firm's legal dispute with Pompliano is expected to follow in the coming months.