[FoRK] From the "oops" department

Jeff Bone jbone at place.org
Thu Aug 5 07:33:43 PDT 2004

Note to self:  never accept share certs torn out of notebook and 
written by hand...  ;-)


Google Cops to Illegal Shares
Associated Press

Story location: http://www.wired.com/news/business/0,1367,64476,00.html

05:35 PM Aug. 04, 2004 PT

Google may have illegally issued more than 23 million shares of its 
stock to hundreds of employees and consultants, injecting an unexpected 
legal risk into the online search engine leader's highly anticipated 

The Mountain View-based company disclosed the possible violations 
Wednesday in a prospectus offering to buy back the affected shares and 
outstanding stock options for a total of $25.9 million, including 
interest payments.

With $549 million in cash as of June 30, Google can easily afford to 
make amends.

But it's uncertain whether the gesture will satisfy everyone affected 
by potential bureaucratic blunders that occurred from September 2001 
through June 2004.

During that time, the company says it neglected to register 23.2 
million shares of common stock and 5.6 million outstanding stock 
options with securities regulators. The oversights might have broken 
federal and state laws, according to Wednesday's filing. The affected 
common stock is owned by 1,105 current and former employees, as well as 
company consultants.

Google warned that its buyback, or "recission," offer may be rejected 
by some people who prefer to sue the company. Google believes it faces 
potential liabilities in 18 states and the District of Columbia, as 
well as federal court.

It's unclear whether Wednesday's twist will affect the timing of 
Google's initial public offering -- a deal expected to raise up to $3.3 
billion, with roughly half of the money flowing into the company's bank 
accounts. The rest of the money will be split up among Google's top 
executives and early investors who plan to sell stock in an IPO 
carrying a target price of $108 to $135 per share.

In Wednesday's filing, Google said it planned to complete the IPO "as 
soon as practicable," but didn't elaborate. Federal securities law 
prohibits Google from making public statements about the IPO beyond the 
information contained it SEC filings. The company's latest filing 
indicated the recission offer will expire sometime next month.

Google is currently letting prospective bidders register for an 
upcoming auction of 24.6 million IPO shares at www.ipo.google.com.

Once the registration period closes -- something that could happen 
later this week -- qualified investors can bid to buy a minimum of five 
shares through one of 28 underwriters participating in the IPO. If the 
auction is completed in a few days, Google's shares could begin trading 
on the Nasdaq Stock Market as early as next week.

A successful IPO might make the recission offer a moot point. 
Wednesday's filing said the stockholders that reject or don't respond 
to the recission offer will have their shares and options automatically 
registered under federal securities law after the IPO is completed. The 
shares then would become tradable after the recission offer expires 
next month.

The offer applies to 1,105 current and former employees, as well as 
company consultants, who own the affected common stock. The options, 
carrying exercise prices ranging from 30 cents to $80 per share, are 
held by 301 people.

End of story

More information about the FoRK mailing list