Think you can buy a $300 million beer company via Facebook and Twitter? Not on the U.S. Securities & Exchange Commission's watch.
The SEC busted two advertising executives who came up with the web site "BuyaBeerCompany.com," with the hopes of raising $300 million to buy Pabst Brewing Co.
They created a Facebook page and Twitter feed to attract would-be investors, promising them “a certificate of ownership as well as beer of a value equal to the amount invested,” according to a SEC news release.
Their plan had two stages: first, ask people to sign their name and pledge an amount. Then, if they raised $300 million in pledges, they’d go back, collect the money, and (one presumes) throw a giant keg party.
The men, Michael Migliozzi II and Brian William Flatow, actually got $200 million in pledges from 5 million people–impressive, but, alas, not enough to buy Pabst. No money was ever collected.
But the SEC felt compelled to step in anyway.
“Under federal securities laws, the two men were required to register their offering before seeking to sell shares to the public,” the SEC stated. “The registration requirements include publicly disclosing a company's financial condition and other information that could help investors determine whether to invest.”
But the agency let the pair off with a slap on the wrist–to “cease and desist from committing or causing any violations and from committing or causing any future violations of Section 5(c) of the Securities Act,” according to the administrative order settling the case.
"Just because would-be investors are being solicited online doesn't make them less deserving of the protections under our securities laws,” said Scott Friestad, associate director in the SEC's Division of Enforcement in a news release. “All investors are entitled to know certain basic information about a company before being asked to invest."
Like whether its beer is any good.