Google settled charges yesterday that it repeatedly broke the law by improperly issuing $82 million in employee stock options, dealing a blow to the online search-engine leader's...

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SAN FRANCISCO — Google settled charges yesterday that it repeatedly broke the law by improperly issuing $82 million in employee stock options, dealing a blow to the online search-engine leader’s do-good image.

The company and its general counsel, David Drummond, resolved the Securities and Exchange Commission (SEC) allegations by signing a cease-and-desist order without admitting or denying the allegations. The alleged misconduct occurred before Google went public last year.

Regulators didn’t impose any fines or other penalties, partly because Google cooperated fully with the investigation, said Carlos Vasquez, an SEC staff attorney who handled the case.

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The settlement emerged yesterday from a broad inquiry into Google’s actions leading up to its closely watched initial public offering of stock five months ago.

The SEC didn’t act upon another highly publicized pre-IPO glitch that threatened to cause legal headaches — a Playboy magazine interview with Google co-founders Larry Page and Sergey Brin that was published just before the IPO was about to be priced.

The interview raised a red flag under SEC rules restricting the public comments of companies preparing to go public. In an unusual step, the SEC required Google to attach a copy of the entire Playboy interview to its official IPO documents and include a warning that the interview could cause legal problems.

“We are pleased there will be no further proceedings regarding the Playboy article and we are satisfied with the settlement on the stock-option issues,” Google spokesman Steve Langdon said.

Google also reached a settlement over similar charges with California regulators.

Google’s missteps leading up to its IPO contributed to an investor backlash that caused the company to lower its price target to $85 per share from a projected range of $108 to $135 per share. The comedown reduced Google’s IPO windfall to $1.67 billion — about $1 billion less than had the company’s shares initially sold for $135.

Since then, investors who bought the IPO shares have fared extremely well. Yesterday, Google’s shares fell 5 cents to close at $195.33.

Still, the SEC’s charges of misconduct represent an embarrassment for a company that has proudly embraced “don’t be evil” as a corporate motto.

Google’s alleged misconduct involves stock options awarded to employees in 2003 and the first four months of 2004. Securities regulations require privately held companies to disclose their finances if they issue more than $5 million in options during a 12-month period — a threshold Google crossed in 2003.

The disclosure requirement can be satisfied by registering the stock with the SEC or providing detailed financial statements and a statement of possible risks to the employees receiving the options. Google took neither step because it didn’t want to risk its closely guarded financial information being shared with its rivals, regulators said.