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Search-engine giant Google has gathered so much cash that it runs the risk of being mistaken for an investment fund. Interested in diversifying its investment strategy but not wanting to be considered a mutual fund, Google has asked the Securities
and Exchange Commission to exempt it from regulations that can apply to
a company with large amounts of marketable securities on its books.
Thus, Google submitted a filing with the SEC on July 20 stating that it exists not to make investments, but to conduct an “Internet and new media business.” Most recently, Google’s balance sheet listed assets totaling $14.4 billion, including $4 billion in cash and $5.8 billion in marketable securities. Under the Investment Company Act of 1940, any company with more than 40 percent of its assets in specific securities is subject to different disclosure and operating rules.
“Google states that it is not in the business of investing, reinvesting, or trading in securities,” the company explained to the SEC in the filing. Google reported $1.47 billion in net income for 2005 claiming around 8 percent of it as investment income. In an attempt to convince the SEC, Google said that it will invest only for “bona fide business purposes” and will not invest “for short-term speculative purposes.”
Google is in the business of surprising consumers with innovative ideas, but the Google Mutual Fund? They may have finally surprised themselves…