California- Google went ahead with the start of its controversial stock auction as planned Friday. But the row over the founders’ interview with Playboy magazine refused to go away. The company was forced to take the unprecedented step of amending its prospectus to include a copy of the article – believed to be the first time a Playboy item has become part of the Securities and Exchange Commission record.

Google also had to clear up several errors made by Sergey Brin and Larry Page in the piece. Anyone appearing in a skin mag wants to look their best. But the SEC, after a close perusal of the latest edition, decided Sergey Brin and Larry Page went too far in pointing up their company’s best assets and airbrushing over a blemish or two. The pair said the company’s Gmail service offered 200 times as much storage as major competitors.

Wrong. “Competitors have substantially narrowed the gap,” the company now admits. They said Googlehad 1,000 employees. Wrong. “Currently, we have approximately 2,292,” Google says. The duo said Google’s Web site is used by more than 65,000 people a day. Wrong. The true figure is 65,000 a month in the United States, the company now says. In Google’s defense, the pair gave the interview four months ago, shortly before the company announced plans to go public.

But the timing of the publication raises questions about whether the pair violated “quiet period”rules for companies planning an IPO. SEC had no official comment. But well-placed sources say the agency plans no further action. However, the interview leaves Google and its advisers liable to lawsuits if investors prove disgruntled. In theory, Google might even have to buy back all the stock sold to the public next week. Next week, the company is expected to sell 25.7 million shares at an expected price of up to $135 a share – pegging the company’s value at $36 billion – Internet records on both counts.

Back Story: The auction for Google Inc.’s highly anticipated initial public offering got off to a rocky start on Friday after the Web search company sidestepped a bullet from securities regulators.

Mountain View, California-based Google opened its auction Friday morning as expected even though hours earlier it filed an amended regulatory document saying a Playboy magazine interview with its founders may have violated US securities rules.

But late on Friday a source familiar with the matter said the Securities and Exchange Commission (SEC) would not delay the deal because of the interview.

The source said the IPO was not delayed because factual differences between the magazine article and Google’s current business were corrected in the regulatory document and a copy of the interview was inserted into the amended regulatory document on Friday morning before the auction began.

Google said in the amended document it believes it did not violate securities rules governing the “quiet period” when its co-founders Sergey Brin and Larry Page gave an interview before the company filed a preliminary prospectus with the SEC on April 29.

The company said in the amended filing that there were three updates or corrections to information in the Playboy article regarding the storage space of its Gmail service, the number of company employees and the number of Google search engine users.

Companies typically avoid media interviews ahead of their IPOs to avoid running afoul of securities requirements designed to keep a company from hyping its stock.

Earlier this year, Salesforce.com Inc. was forced to delay its IPO after the company and its Chief Executive Marc Benioff were featured in a New York Times article.

Google declined to comment beyond its IPO Web site, http://www.ipo.google.com, and SEC spokesman John Nester declined to comment.

Even before the auction started, investors seemed unfazed by the possible violation.

“I read the Playboy interview, and there was nothing in there that made me think their business model was any different than I thought it was,” said Barry Randall, a US technology fund manager at US Bancorp Asset Management, who said he still intends to bid on the offering.

The possible violation was the latest twist for the closely watched IPO and raised new questions as to how its unusual bidding process for shares would fare.

Google has filed to sell 25.7 million shares at an estimated price range of $US108 to $US135 per share in a modified Dutch auction. Google has not disclosed when the auction would end, only that it would announce the price of the IPO next week.

Google’s auction is taking place during a difficult market for IPOs. With the broader equity markets under pressure and investor demand for new deals waning, a steady stream of IPOs has been postponed or withdrawn.

Those making it to market this quarter are frequently pricing below expectations, leaving investors to wonder whether Google’s shares will price within their estimated range. Google is now taking bids from investors, who need to state how many shares they want to buy and at what price.

It is using a modified version of a Dutch auction to sell its shares. In a typical Dutch auction, the offering is launched at the highest price at which all of the shares offered can be sold to potential investors. But Google has left itself some wiggle room, saying it could price the IPO lower in order to get a wider distribution of its shares.