Google may have illegally issued more than 23 million shares of its stock to hundreds of employees and consultants, injecting an unexpected legal risk into the online search engine leader's highly anticipated public offering. The company disclosed the possible violations in a prospectus offering to buy back the affected shares and outstanding stock options for a total of $25.9 million. From September 2001 through June 2004, the company says, it neglected to register 23.2 million shares of common stock and 5.6 million outstanding stock options with securities regulators. Google warned that its buyback offer may be rejected by some people who prefer to sue. It's unclear whether this twist will affect the timing of the IPO.

FCC Approves New TiVo Service

The Federal Communications Commission approved a plan by the makers of the popular TiVo digital recording device to allow users to watch copies of shows and movies on devices outside their homes. TiVo's technology was one of 13 approved by the FCC for use with new television tuners that can receive digital and high-definition programming. The motion picture industry and the National Football League opposed TiVo's application, claiming it would allow uncontrolled Internet distribution of copyrighted programs.

MORE NEWS

Service sector activity heated up strongly in July, marking a 16th straight month of growth, even as employment conditions softened, according to a report. The Institute for Supply Management said its non-manufacturing index moved to 64.8, versus 59.9 in June and 65.2 in May, better than the 61.5 that had been forecast. Separately, the Commerce Department said U.S. factory orders grew a solid 0.7 percent in June from the previous month, the largest increase since March, up from a 0.4 percent rise in May. Orders for durable goods, costly manufactured items expected to last at least three years, posted a 0.9 percent increase, a turnaround from a 0.9 percent drop in May.

The Federal Communications Commission, acting on requests from law-enforcement authorities, voted 5 to 0 to begin writing rules that would subject telephone calls delivered over the Internet to the same wiretap law that applies to traditional phone service, which requires telecommunications carriers to modify their systems so investigators can conduct electronic surveillance.

The International Monetary Fund has joined in the call for greater oversight of mortgage finance giants Fannie Mae and Freddie Mac. The IMF said the companies need a strong regulator who could limit their portfolio growth. The primary concern is that they continue to grow unabated under the impression that they are too big to fail or that the U.S. government would bail them out. President Bush, Treasury Secretary John W. Snow and Federal Reserve Chairman Alan Greenspan are among those who have called for tougher regulation.

Brokerages and 401(k) plan administrators are asking securities regulators to consider time-stamping software and auditing plans as an alternative to a "hard" 4 p.m. deadline for trading shares of mutual funds. The Securities and Exchange Commission proposed the deadline last year in response to allegations of abusive trading in mutual funds and instances of illegal late trading.

The pilots union at Delta Air Lines balked at $1 billion in concessions sought by management. In a letter to members, the union's executive committee chairman said the pilots will "take another path" if the airline doesn't push other stakeholders for concessions. There was no mention of what that path might be. Delta, the nation's third-largest airline, has warned that it may have to file for bankruptcy if it doesn't get deep concessions from pilots.

Donald J. Carty, American Airlines' former chief executive, was named to Hawaiian Airlines' board of directors and has bought $2 million in stock of the bankrupt airline's parent. Hawaiian Holdings, which disclosed Carty's role in a filing with the Securities and Exchange Commission, is one of several groups bidding to lead Hawaiian Airlines out of bankruptcy.

Dynegy agreed to $22 million in severance pay for former chief executive Charles L. Watson, who was fired in 2002 as regulators investigated company accounting and its stock plummeted to become the year's worst performer in Standard & Poor's 500-stock index. Watson had sought $28.7 million. Dynegy fought the request but entered settlement talks after an arbitration panel in April gave former chief operating officer Steve Bergstrom $10.4 million in severance, the full amount he sought.

Electronic Data Systems said the Navy has agreed to changes that will reduce the cost of building and operating a communications network for the Navy and Marine Corps. EDS has lost money on the $8.8 billion contract as upfront costs have far exceeded payments by the Navy.

Express Scripts was accused by New York authorities of pocketing as much as $100 million in drug rebates that should have gone to the state. The pharmacy-managing company denied the allegations by New York state Attorney General Eliot L. Spitzer and state Civil Service Commissioner Daniel Wall. The state filed a civil lawsuit seeking restitution.

BellSouth's 47,000 union employees have approved a strike if a new contract agreement isn't reached. No date has been set. The three-year contract between the Atlanta company and the Communication Workers of America expires at midnight Saturday. Job security and health benefits are sticking points.

The Port Authority of New York and New Jersey agreed to build a $808 million terminal at John F. Kennedy International Airport to serve JetBlue Airways flights. The JetBlue agreement also calls for renovating and reusing the former TWA Flight Center, an architectural landmark completed in 1962 that was designed by Eero Saarinen to look like a bird in flight.

INTERNATIONAL

Royal Dutch/Shell Group said a Chinese state oil company called off plans for a foreign consortium including Shell and Exxon Mobil to invest in a multibillion-dollar natural gas pipeline to China's eastern cities. The $5.2 billion pipeline was the first major Chinese energy project opened to foreign investors.

A Japanese court reaffirmed its order to bar UFJ Holdings from pursuing merger talks with Mitsubishi Tokyo Financial Group. UFJ, Japan's fourth-largest banking group, pledged immediately to appeal the Tokyo District Court ruling reaffirming its injunction ordering UFJ to drop the merger negotiations. A deal would have created the world's largest bank. Sumitomo Trust and Banking sought to block the talks, saying they violated an agreement made in May to buy Osaka-based UFJ's trust banking operations.

RECALLS

The Chrysler Group of DaimlerChrysler recalled 681,000 Dodge and Chrysler minivans because a power-steering hose can leak fluid and cause a fire. The 2002 through 2004 models are equipped with V-6 engines. About 2,000 Dodge Ram pickups also were recalled because an alternator wire may be damaged. That recall affects 2004 models with 4.7-liter engines.

Kia Motors will recall at least 250,000 Sephia and Spectra sedans and Sportage sport-utility vehicles to fix seat belts that may not latch. The National Highway Traffic Safety Administration said front safety belts on the vehicles may remain unlatched even though riders hear a clicking sound when they buckle up. Accident reports showed 52 people were hurt in 42 incidents, with no deaths, Kia spokesman Kim Custer said in an interview. The recall will cover the 2000 model Spectra and the 1999 and 2000 model Sephia and Sportage. Kia had recalled 189,706 of the 1997 and 1998 models of the Sephia and Sportage in 2002 to fix the same defect after the agency received 32 consumer complaints.

EARNINGS

Cigna reported second-quarter earnings of $515 million, compared with a net loss of $53 million in the same period a year ago, after selling a retirement unit and reducing expenses. Sales at the health insurer were little changed at $4.63 billion.

CVS said its second-quarter profit rose 17.7 percent, to $230.8 million, boosted by rising sales of pharmacy products and other goods at established stores. Revenue rose to $6.94 billion from $6.44 billion.

Hartford Financial Services Group, the largest U.S. seller of variable annuities, said second-quarter profit fell 15 percent, to $433 million, after the company lowered its estimate of contributions from reinsurers. Profit excluding the cost of uncollectible reinsurance and investment gains was well above estimates.

Univision Communications, the largest Spanish-language television and radio broadcaster, said second-quarter profit jumped 63 percent, to $83.7 million, as advertisers spent more to reach Hispanic households. Revenue rose 25 percent, to $495.3 million. Year-earlier figures were adjusted for the 2003 acquisition of Hispanic Broadcasting.

Compiled from reports by the Associated Press, Bloomberg News, Dow Jones News Service and Washington Post staff writers.

Brazil's foreign minister, Celso Amorim, speaks with reporters in Brasilia about a World Trade Organization preliminary ruling that the European Union has violated limits on sugar export subsidies. Developing countries say those subsidies undercut their producers' prices. The WTO upheld a complaint filed by Brazil, Australia and Thailand, Amorim said.