|
|
|
Google gets wrist slapped Search engine settles charges over illegal issuance of options
14 January 2005Google settled federal civil charges Thursday that it illegally issued more than $80 million in employee stock options before its August initial public offering, an agreement that amounted more to public humiliation of the Internet search engine company than punishment.
As part of the settlement, Mountain View's Google and its general counsel, David Drummond, promised to follow the law in the future. Officials from the Securities and Exchange Commission didn't impose fines, saying the company fully cooperated in the investigation.
Marc Fagel, assistant administrator in the San Francisco district office of the SEC, called the case a warning shot, adding that the public impact should not be minimized because there is no fine.
The SEC also decided to take no action against Google for an interview the company's founders, Sergey Brin and Larry Page, published in Playboy magazine last year while the company's IPO was pending.
Officials had been looking into whether the interview, granted just before Google disclosed its IPO plans, violated federal requirements that executives avoid disclosing information that could affect the value of a company's stock while an offering is taking place.
Ultimately, Google was forced to take the unusual step of republishing the interview in subsequent filings with the SEC.
"We are pleased there will be no further proceedings regarding the Playboy article, and we are satisfied with the settlement on the stock option issues," said Steve Langdon, a Google spokesman. "We are glad to have these issues behind us."
Google, whose corporate motto is "Don't be evil," neither admitted nor denied wrongdoing in the stock options matter.
The settlement concerns options Google issued to employees and some contractors from 2002 to 2004, prior to its IPO. Federal law requires companies issuing more than $5 million in options during a 12-month period to do one of two things. Either they must register the securities with the SEC and make financial information public or they can give information directly to options recipients.
Google did neither, even though the company far exceeded the $5 million threshold in stock option awards, according to the SEC.
At the time, Google feared that financial disclosure would give its competitors an advantage. The company believed that it could avoid the problem by relying on a legal exemption, according to the SEC.
Drummond advised Google's board that it could continue to issue options, the SEC said. However, he failed to inform them of the registration and disclosure obligations. The exemption the company sought turned out to be inapplicable, the SEC said.
Drummond continues to have "the full support of the company and its leadership," Langdon said. In July, Google disclosed that the SEC's staff had recommended civil fraud charges against Drummond for his work as chief financial officer at a previous employer.
Tracy Davis, who supervised the investigation for the SEC, said other Silicon Valley companies may have engaged in similar practices with options awards. "In this particular instance, Google's IPO was successful -- the investors gained money," Davis said. "But you could imagine that the next one might not be."
Google first disclosed that it may have run afoul of securities law during the run-up to its IPO. It has since offered to buy back 28 million shares in question, although there appeared to be few, if any, takers because of the low price offered compared with the post-offering value of the shares.
Also on Thursday, the California Department of Corporations said that it had reached an agreement with Google concerning options it granted in 2003. Google promised to follow the law in the future. Several other states continue to investigate the matter.
Google shares dropped 5 cents Thursday to close at $195.33.
Source: San Francisco Chronicle
All trademarks and copyrighted information contained herein are the property of their respective owners.
Related Internet Articles
|
 | Unlimited Domain Hosting Only $10 a Month
Founded in 2002, Hostgator.com, LLC has quickly grown from its humble beginnings in Boca Raton, Florida into one of the most respected names in the web hosting industry. Renowned for exceptional customer support and unrivaled in terms of customer satisfaction, Host Gator is poised to take the lead in the highly competitive and densely populated world of web hosting providers.
For more information!
Click Here |
|
|
 | Got Root?! 1&1 Dedicated Servers starting at $99 mo.
We guarantee the highest product quality, top security, and unshakeable reliability. 1&1’s advanced Data Centers have been built from the ground up using the most advanced technology available, giving our global network a strength that is beyond doubt. The power and stability of 1&1’s systems allows us to be first to market with web products that are innovative yet dependable.
For more information!
Click Here |
|
|
 | Get a full dedicated server starting at just $29.95!
ServerPronto is a dedicated hosting subsidiary of Infolink, one of a few profitable Data Center Corporations in the world. From it's beginning in January 1999, Infolink served the "Value Orientated" segment of the Internet market. Not by offering a sub-standard product at a low price, but by offering a top-quality, feature rich product at an incredible price. Since the beginning Infolink has enjoyed dramatic growth while other's in the industry have suffered. We operate our own network in the USA and maintain redundant Fiber Optic Rings which allow us to directly peer with Tier 1 Internet Backbones.
For more information!
Click Here |
|
|
|
|
