Google to become an investment bank?

From Good Morning Silicon Valley

Poor Google — you and I should have such problems. The search sovereign has amassed so much cash that it is in danger of possible reclassification and regulation as an investment firm. In its most recent quarterly financials, Google listed assets totaling $14.4 billion, including $4 billion in cash and $5.8 billion in marketable securities. Under guidelines set by the Investment Company Act of 1940, companies with more than 40 percent of their assets in securities are to be regulated as a mutual fund. Google clearly falls into that category at the moment, so it asked the Securities and Exchange Commission late last month for an exemption. “Google states that it is not in the business of investing, reinvesting, or trading in securities,” the company told the SEC, adding it has no plans to invest “for short-term speculative purposes.” The SEC hasn’t yet responded to the request, but most Wall Street types I spoke with feel approval is likely. “They will probably get the SEC exemption — but if they didn’t, its fascinating to think of what the boys could do with that $10 billion in cash (and securities),” said Barry Ritholtz, chief market strategist for Ritholtz Research. “I strongly doubt we will see a big buyback or a special dividend from them. And there’s only so many jumbo jets anyone really needs. So that makes a major acquisition the next option. Hell, they could buy Tivo, XMSR, half of — and still have a few billion dollars left.”