Don't Cry for Me, Silicon Valley

The Wall Street Journal (subscription required) reports that Google has amassed so much cash that it risks being treated as an investment fund under Securities and Exchange Commission rules:

The company, which wants to diversify its investment strategy but doesn't want to be regulated as a mutual fund, has asked the Securities and Exchange Commission to exempt it from regulations that can apply to a company with a lot of marketable securities on its balance sheet.

To that end, the Mountain View, Calif., company made a filing on July 20 to persuade the SEC that it exists not to make investments, but to conduct an "Internet and new media business."

Google's most recent quarterly 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, a company with more than 40% of its assets in certain types of 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 told the SEC in the filing. Google, which reported $1.47 billion in net income for 2005, said that about 8% of that amount was investment income.

To help make its case, Google told the SEC that it will invest only for "bona fide business purposes" and won't invest "for short-term speculative purposes."

In the absence of an exemption, Google disclosed that its executives are authorized to create an investment mix for the company that ensures the 1940 investment-company law won't apply.

I wonder what will happen when I Google "world's smallest violin" . . . .