Feeds

Google must buy back buddy stock

Tell Sid: he can't keep those shares

  • alert
  • submit to reddit

Application security programs and practises

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?

The Power of One eBook: Top reasons to choose HP BladeSystem

More from The Register

next story
BBC goes offline in MASSIVE COCKUP: Stephen Fry partly muzzled
Auntie tight-lipped as major outage rolls on
There's NOTHING on TV in Europe – American video DOMINATES
Even France's mega subsidies don't stop US content onslaught
You! Pirate! Stop pirating, or we shall admonish you politely. Repeatedly, if necessary
And we shall go about telling people you smell. No, not really
Airbus promises Wi-Fi – yay – and 3D movies (meh) in new A330
If the person in front reclines their seat, this could get interesting
UK Parliament rubber-stamps EMERGENCY data grab 'n' keep bill
Just 49 MPs oppose Drip's rushed timetable
Samsung threatens to cut ties with supplier over child labour allegations
Vows to uphold 'zero tolerance' policy on underage workers
Dude, you're getting a Dell – with BITCOIN: IT giant slurps cryptocash
1. Buy PC with Bitcoin. 2. Mine more coins. 3. Goto step 1
US freemium mobile network eyes up Europe
FreedomPop touts 'free' calls, texts and data
prev story

Whitepapers

Reducing security risks from open source software
Follow a few strategies and your organization can gain the full benefits of open source and the cloud without compromising the security of your applications.
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.
Application security programs and practises
Follow a few strategies and your organization can gain the full benefits of open source and the cloud without compromising the security of your applications.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.
Consolidation: the foundation for IT and business transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.