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Google Fears Investment Fund Status

David A. Utter
Staff Writer
Published: 2006-08-25

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An obscure little fun fact about Google has been making the rounds; last month, Google filed paperwork with the Securities and Exchange Commission requesting that it not be treated like a mutual fund.

Google Fears Investment Fund Status
Does Google Fear The SEC?

What do Google and a mutual fund have in common? Without an exemption from reporting the securities it owns, Google could be subject to particular SEC regulations as it looks for some financial diversity.

A report on the Wall Street Journal's website mentioned Google's filing of the 40-App. That is an "application for exemption and other relief filed under the Investment Company Act of 1940." The SEC website confirms Google filed this on July 20th.

Of Google's $14.4 billion in assets, the company has $4 billion in cash and $5.8 billion in marketable securities. According to the report, companies with more than 40 percent of assets in certain types of securities would have to comply with different regulations and disclosure requirements.

Google has pledged to the SEC that it is not indulging in speculative investing, as the company is an "Internet and new media business" and not being operated as an investment fund.

Minus an exemption, Google executives have been authorized to diversify the company's investments to avoid problems with the 1940 Act.

Having to disclose its investment choices would make for very interesting reading by those who follow Google and the broader stock market. Speculators could perceive Google's investment in a particular company as possibly indicating an acquisition interest. That would cause some market gyrations as other investors attempt to get into a company and drive up its stock price.

Likewise, if such strategies on the market paralleled Google's business strategy, competitors could anticipate Google's upcoming moves. Given the typical corporate zeal for maintaining silence about their future plans, Google is like other companies in not wanting to tip their hand to others.

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About the Author:
David Utter is a staff writer for WebProNews covering technology and business.

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