SEC stops Web campaign to buy beer company
Note that the title I have given this post is not the same as the title of the article, written by Marcy Gordon of the AP. I have redacted a pun for your protection.
It seemed like an innovative way to buy a beer company: Start an online campaign to purchase the iconic Pabst Brewing Co. and sell shares on Facebook and Twitter to cover the $300 million cost.
Michael Migliozzi II and Brian William Flatow found 5 million people who said they would invest a total of $200 million. But the federal government halted the venture after it informed the two men of one major oversight – they neglected to register the public offering with the Securities and Exchange Commission, a violation of federal law.
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By law, public stock offerings must be registered with the SEC before their promoters begin to sell shares. When they register to sell shares in a company, they must provide information about the company’s financial condition and other data to help investors decide whether they should buy in.
Genius! Except for that pesky thing where we live in a country with regulations.
Migliozzi and Flatow spread the word on Facebook and Twitter. And they created the BuyaBeerCompany.com web site, which included a countdown timer showing how much money had been pledged.
Prospective investors were told to hold off sending money until the company had $300 million in pledges. Once they reached that goal, promoters would contact them to collect the money and proceed to buy Pabst. In return, investors would receive a certificate of ownership and beer equal in value to what they had contributed.
SOLD
The SEC has an entire enforcement unit devoted to Internet surveillance with a staff of more than 200 people. The CyberForce has flagged numerous instances of unregistered securities sales online.
- Colin:
- Hell yeah.
- Colin:
- Securities fraud. Cyber securities fraud.