Google May Have Illegally Issued Employees Shares

Web search giant Google Inc. recently admitted that it may have illegally issued as much as $3.1 billion in shares after its planned initial public offering (IPO), and offered to buy them back at a significant discount.

The potential contretemp, disclosed in a filing with the U.S. Securities and Exchange Commission this month, precedes Google's highly anticipated IPO, which could raise as much as $3.3 billion and could take place at almost any time (and may even have done so before you read this).

The company said it sold 23.2 million shares to 1105 current and former employees and consultants and granted an additional 5.6 million stock options to 301 people. The transactions took place between September 2001 and June 2004 and were not registered, as required by law, Google said.

The Mountain View, CA-based Google said it will pay $25.9 million, including interest, to buy back the shares and options. There is speculation that some holders of the securities might sue the company rather than accept the buyback.

According to Google, the offer will expire some time in September. Holders who reject or do not respond to the offer will have their shares automatically registered after the IPO is completed.

Google has not commented on whether this event will affect the timing of its much-ballyhooed IPO.

Google plans in its IPO to offer 24.6 million shares at an estimated $108 to $135 each, valuing the company at as much as $36 billion. At the high end of the range, the employee share holdings in question would be worth $3.1 billion.

The company said it may have broken federal securities laws and the securities laws of 18 states and the District of Columbia by failing to register the stock and options or exempt them from registration.

Google is using a “Dutch auction” process for the IPO, and bidders may register at www.ipo.google.com.

The company and its lead underwriters, Credit Suisse First Boston and Morgan Stanley, will determine the highest price at which there is demand for all shares, and price the shares at or below that price.

Google said the 18 states whose securities laws may have been violated are Arkansas, California, Colorado, Connecticut, Georgia, Illinois, Maryland, Massachusetts, Michigan, Nevada, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, Texas, Virginia and Washington.

Web search giant Google Inc. recently admitted that it may have illegally issued as much as $3.1 billion in shares after its planned initial public offering (IPO), and offered to buy them back at a significant discount.

The potential contretemp, disclosed in a filing with the U.S. Securities and Exchange Commission this month, precedes Google's highly anticipated IPO, which could raise as much as $3.3 billion and could take place at almost any time (and may even have done so before you read this).

The company said it sold 23.2 million shares to 1105 current and former employees and consultants and granted an additional 5.6 million stock options to 301 people. The transactions took place between September 2001 and June 2004 and were not registered, as required by law, Google said.

The Mountain View, CA-based Google said it will pay $25.9 million, including interest, to buy back the shares and options. There is speculation that some holders of the securities might sue the company rather than accept the buyback.

According to Google, the offer will expire some time in September. Holders who reject or do not respond to the offer will have their shares automatically registered after the IPO is completed.

Google has not commented on whether this event will affect the timing of its much-ballyhooed IPO.

Google plans in its IPO to offer 24.6 million shares at an estimated $108 to $135 each, valuing the company at as much as $36 billion. At the high end of the range, the employee share holdings in question would be worth $3.1 billion.

The company said it may have broken federal securities laws and the securities laws of 18 states and the District of Columbia by failing to register the stock and options or exempt them from registration.

Google is using a “Dutch auction” process for the IPO, and bidders may register at www.ipo.google.com.

The company and its lead underwriters, Credit Suisse First Boston and Morgan Stanley, will determine the highest price at which there is demand for all shares, and price the shares at or below that price.

Google said the 18 states whose securities laws may have been violated are Arkansas, California, Colorado, Connecticut, Georgia, Illinois, Maryland, Massachusetts, Michigan, Nevada, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, Texas, Virginia and Washington.