The Securities and Exchange Commission (SEC) has charged Google with failing to register the issuance of option grants to employees or provide required financial information to the option recipients. The Silicon Valley-based company, according to the SEC, issued over $80 million in stock options to its employees in the two years preceding its IPO, yet failed to register the securities or make financial disclosures mandated by federal securities law.
The federal securities laws require companies issuing over $5 million in options during a 12-month period either to provide detailed financial information to the option recipients, or to register the securities offering with the Commission and thereby publicly disclose financial and other important information. The SEC says Google far exceeded the $5 million disclosure threshold, yet failed to register the options or provide the required financial information to employees. According to the Commission, Google - which, at the time, was still a privately-held company - viewed the disclosure of the information to employees as strategically disadvantageous, fearing the information could leak to Google's competitors.
Stephen Cutler, of the Enforcement Division in Washington, D.C., said: "The securities laws exist to ensure full disclosure to investors, including employees accepting stock options as compensation.