Google’s High-Class Problem

Google has so much cash it’s in danger of being regulated as a mutual fund.

Google last month asked the SEC for an exemption from the Investment Company Act of 1940 that would allow it to seek higher returns on its cash without being regulated as a mutual fund, according to news reports.

The search giant’s problem is not unprecedented — Microsoft received a similar exemption in 1988, according to Bloomberg.

Because Google’s $10 billion in cash and securities make up more than 40 percent of its assets, its investments are largely limited to low-yield U.S. government bonds, lest it fall under mutual fund restrictions. With an exemption, Google could earn a higher return on its cash hoard and better compete with the likes of Microsoft.

Google shares were little moved on the news Friday, and the rest of the market didn’t move much either, as rising oil prices on a Gulf storm threat limited upside. A much-anticipated speech by Fed Chairman Ben Bernanke revealed little in the way of interest rate policy despite fears that the economy is slowing too fast.

Next week will give traders multiple chance to assess the direction of interest rates, with Fed meeting minutes, another speech by Bernanke, a second-quarter GDP revision, manufacturing and unemployment data all on the agenda.

Ansoft gained 15% on its results.

Checkfree gained 5% on an A.G. Edwards upgrade.

Global Crossing climbed 3% on an acquisition.

The Nasdaq rose 3 to 2140, the S&P 500 slipped 1 to 1295, and the Dow lost 20 to 11,284. Volume declined to 1.67 billion shares on the NYSE, and 1.32 billion on the Nasdaq. Advancers led 16-15 on the NYSE, and 15-14 on the Nasdaq. Upside volume was 47% on the NYSE, and 62% on the Nasdaq. New highs-new lows were 73-41 on the NYSE, and 54-58 on the Nasdaq.