WASHINGTON - this appeared to be an innovative way to buy a beer company: start an online campaign to buy the iconic Pabst Brewing Co. and sell shares on Facebook and Twitter to cover the cost of $ 300 million.
Michael Migliozzi II and Brian William Flatow found 5 million people who have said that they would invest a total of $ 200 million. But the Federal Government has stopped the business after she informed the two men to a major oversight - they failed to register the public offering with the Securities and Exchange Commission, a violation of federal law.
The SEC said Wednesday that it has reached an agreement with two advertising executives. The men, who has never collected any sum of money, has agreed to stop selling shares to the public.
Case spotlights a growing challenge for regulatory agencies, which must patrol businesses online and find some scams disguised as stock offerings.
The SEC has a unit of the entire application dedicated to the monitoring of the Internet with a staff of over 200 people. Cyberspace has reported many cases of sale of securities not registered online. But Scott Friestad, Assistant Director of the SEC enforcement division, called "pretty new." beer campaign He said that he could not recall another instance of someone sells shares in line to buy an existing business.
By law, offers of public stocks must be registered with the SEC before their developers will begin to sell shares. When they register to sell shares of a company, they must provide information on the financial situation of the company and other data to help investors decide if they should buy.
MIGLIOZZI, 45 and Flatow, 41, neither admitted nor denied wrongdoing in accepting the order of "cessation and forbearance," the SEC.
Their lawyer, Steven Berkowitz, said the two are old friends of the advertising company who had the idea as "an interesting crowdsourcing experience." Crowdsourcing is a way to organize large groups of people using the Internet and social media.
"He never advanced on them" they need to register the offer without all of the shares sold, Berkowitz said.
They have launched their campaign to buy Pabst in November 2009 and received an "overwhelming response", said Berkowitz. The company that sells Schlitz, Pabst Blue Ribbon and Old Milwaukee, belonging to a decade by a charitable foundation and was seeking a buyer at the time.
MIGLIOZZI and Flatow spread the word on Facebook and Twitter. And they created the website BuyaBeerCompany.com, which included a timer countdown showing how much money had been promised.
Potential investors were informed to keep distance to send money until the company had $ 300 million in pledges. Once they have reached this goal, the developers contacted them to collect money and to proceed to the purchase of Pabst. In return, investors would receive a certificate of ownership and value of what they had contributed to the beer.
The campaign has been rapid interest. Web site reported having received promises of $ 14.75 million in the first three weeks, said the SEC. The website BuyaBeerCompany has continued to seek promises until April 2010, when the SEC advised Migliozzi and Flatow of the violation as possible. Berkowitz said he that then advised them dismantle the web site and to suspend the campaign.
Pabst was sold to Dean v. Mitropoulos, a leader of the food industry, in June 2010.
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