Snapchat’s owners have reached a settlement with its ousted co-founder

While all eyes were on Apple’s AAPL -0.35% new iPhone launch Tuesday, Snapchat quietly settled a nasty cofounder dispute that has been hanging over the company for months, even as it raised new funds at an eye-popping $10 billion valuation. CEO Evan Spiegel and CTO Bobby Murphy had just joined Forbes’ billionaires ranks last month when the Venice, Calif. company, whose popular app enables users to send photos and short videos that vanish from devices and servers after a short amount of time, raised $20 million from legendary Silicon Valley venture firm Kleiner Perkins Caufield & Byers. Snapchat’s $10 billion valuation in the round vaulted Spiegel, 24, and Murphy, 26–who each own an estimated 15% of Snapchat–to a net worth of about $1.5 billion each. But that wealth was threatened by a lawsuit the duo faced from their old Kappa Sigma fraternity brother Reggie Brown, who had claimed he came up with the initial idea for the app, which was first called Picaboo, and was then unfairly shut out of the riches. Now with much of the tech community distracted by Apple’s megawatt new device announcements, Snapchat’s put the Brown saga to bed. Terms of the settlement are confidential, but it seems likely that Brown will walk away with much less than an equal share. Back in December, not long after the company had turned down a $3 billion acquisition offer from Facebook, Brown had sought up to a third of the company. “It’s definitely over a billion dollars we’re seeking,” Luan Tran, one of Brown’s lawyers, had told Forbes for our cover story on the company’s history.