Feeds

Google must buy back buddy stock

Tell Sid: he can't keep those shares

  • alert
  • submit to reddit

Build a business case: developing custom apps

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?

A new approach to endpoint data protection

More from The Register

next story
Amazon says Hachette should lower ebook prices, pay authors more
Oh yeah ... and a 30% cut for Amazon to seal the deal
Philip K Dick 'Nazi alternate reality' story to be made into TV series
Amazon Studios, Ridley Scott firm to produce The Man in the High Castle
Nintend-OH NO! Sorry, Mario – your profits are in another castle
Red-hatted mascot, red-colored logo, red-stained finance books
Sonos AXES support for Apple's iOS4 and 5
Want to use your iThing? You can't - it's too old
Joe Average isn't worth $10 a year to Mark Zuckerberg
The Social Network deflates the PC resurgence with mobile-only usage prediction
Chips are down at Broadcom: Thousands of workers laid off
Cellphone baseband device biz shuttered
Feel free to BONK on the TUBE, says Transport for London
Plus: Almost NOBODY uses pay-by-bonk on buses - Visa
Twitch rich as Google flicks $1bn hitch switch, claims snitch
Gameplay streaming biz and search king refuse to deny fresh gobble rumors
Stick a 4K in them: Super high-res TVs are DONE
4,000 pixels is niche now... Don't say we didn't warn you
prev story

Whitepapers

7 Elements of Radically Simple OS Migration
Avoid the typical headaches of OS migration during your next project by learning about 7 elements of radically simple OS migration.
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.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
Solving today's distributed Big Data backup challenges
Enable IT efficiency and allow a firm to access and reuse corporate information for competitive advantage, ultimately changing business outcomes.
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?