Google foul of SEC before it's even floated

Google may have run afoul of securities laws when it doled out millions of shares to employees and consultants over the past three years, according to a document filed with the Securities and Exchange Commission.

The search giant is offering to rescind more than 28 million shares because it said it failed to register them under federal and state securities laws, according to an amendment to the company's IPO prospectus.

Google offered to purchase more than 23 million shares sold to 1,105 employees and another 5.6 million stock options held by 301 people, according to the filing. The affected shares and options were issued between September 2001 and June 2004, at exercise prices ranging from 30 cents to $80 per share.

"These option grants and stock issuances may have violated the Securities Act of 1933 and the state securities laws" of 18 states, including Arkansas, California and Colorado, as well as the District of Columbia, according to the filing.

By rescinding the shares, Google seeks to address legal concerns surrounding the issuance of the shares. The company is offering to buy back shares sold equal to the value of their "strike price", or issuance price, plus interest.

A Google representative could not be immediately reached for comment

Stefanie Olsen writes for News.com