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By Stefanie Olsen, 17 August 2004 08:15

NEWS The US Securities and Exchange Commission has begun an informal inquiry into Google's issuance of stock options to insiders, Google said late on Monday. It's yet another caution before the company's closely watched public offering begins.

State regulators from California and elsewhere have also requested more information about the shares, according to registration documents filed with the SEC. On 5 August, Google began offering to rescind nearly 28 million shares issued over the last three years, because it failed to register them under the law.

Google's filing said: "If it is determined that we offered securities without properly registering them under federal or state law, or securing an exemption from registration, regulators could impose monetary fines or other sanctions as provided under these laws."

The warning is only the latest for the search company, as it approaches a long-awaited initial public offering, an auction of about 24.6 million shares that could be closed as early as on Tuesday evening. Google, which expects to raise between $2.7bn and $3.3bn, has asked the SEC to declare the registration of its IPO shares effective on Tuesday at 1 pm PDT, according to a notice posted on its IPO website.

Last Friday, Google filed an amendment to its prospectus cautioning investors that a recent Playboy magazine article featuring company co-founders Larry Page and Sergey Brin could violate SEC rules governing its 'quiet period'. The company said it would vigorously fight any such determination on the part of SEC regulators, however.

Google also announced its share buyback offer in a recent filing, drawing investor concern. Securities attorneys and investment bankers said it's not uncommon for a company to forgo registering its shares before filing initial IPO documents. But the number of unregistered shares involved sets Google

Stefanie Olsen writes for CNET News.com