Feeds

Google must buy back buddy stock

Tell Sid: he can't keep those shares

  • alert
  • submit to reddit

The essential guide to IT transformation

Google was lauded for bypassing institutional cronyism when it opted for an auction process for its initial public stock offering. But a different kind of cronyism has landed it in breach of financial regulations.

Google has been obliged to buy back $28.8m worth of stock and options offered to employees, contractors and buddies after belatedly discovering it had failed to register the giveaways, thus breaching IPO regulations in 18 states, including New York, California and Texas. Google granted the shares to 1,105 employees or contractors, and 301 others. The recission, as it's known, could cost the company almost $26m.

There's a problem, however. Two of the largest shareholders have refused Google's buyback price of 20 per cent. Some of the options were granted for as little as 30 cents, while the IPO is priced at between $108 and $135, and of course, stockholders are expected to make a further killing when the auction process begins.

Google designed the auction process to bypass the pre-flotation sweeteners that gave the dot.com IPO era a bad name. Venture capitalists who funded the bust-to-begin-with stocks offered generous helpings to financial institutions involved in the IPO process, and to their CEO pals, ensuring they cashed in when the stock started trading. The auction process was intended to be more equitable and more appealing to small investors. However in a CBS poll, over 90 per cent of small investors said they'd give the company a pass.

"My take is Google doing the auction (for the little guy) and then pricing shares so outrageously is like a veteran rock group saying they're going on tour for the fans and the cheapest tickets are $500. A lot of fans will skip it and the average investor will be priced out," complained one.

It's not the first instance of the bright young things at Google failing to hand in their homework correctly. The company failed to realize that Gmail trademark was already registered in 80 countries and is being sued by the franchise that looks after a popular children's book, the Googles. Both the domain registration and website Googles.com predated the search engine by several months. ®

Related stories

Google prices IPO, names ticker
Google sued by Planet Goo
Google prices IPO, names ticker
Google demotes Coca Cola jingle
Google's public-auction IPO: smart move?

Secure remote control for conventional and virtual desktops

More from The Register

next story
6 Obvious Reasons Why Facebook Will Ban This Article (Thank God)
Clampdown on clickbait ... and El Reg is OK with this
Banking apps: Handy, can grab all your money... and RIDDLED with coding flaws
Yep, that one place you'd hoped you wouldn't find 'em
No, thank you. I will not code for the Caliphate
Some assignments, even the Bongster decline must
Caught red-handed: UK cops, PCSOs, specials behaving badly… on social media
No Mr Fuzz, don't ask a crime victim to be your pal on Facebook
Barnes & Noble: Swallow a Samsung Nook tablet, please ... pretty please
Novelslab finally on sale with ($199 - $20) price tag
Ballmer leaves Microsoft board to spend more time with his b-balls
From Clippy to Clippers: Hi, I see you're running an NBA team now ...
Video of US journalist 'beheading' pulled from social media
Yanked footage featured British-accented attacker and US journo James Foley
Call of Duty daddy considers launching own movie studio
Activision Blizzard might like quality control of a CoD film
Primetime precrime? Minority Report TV series 'being developed'
I have to know. I have to find out what happened to my life
prev story

Whitepapers

A new approach to endpoint data protection
What is the best way to ensure comprehensive visibility, management, and control of information on both company-owned and employee-owned devices?
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Maximize storage efficiency across the enterprise
The HP StoreOnce backup solution offers highly flexible, centrally managed, and highly efficient data protection for any enterprise.
How modern custom applications can spur business growth
Learn how to create, deploy and manage custom applications without consuming or expanding the need for scarce, expensive IT resources.
Next gen security for virtualised datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.