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.
More of the same. .Stifle any possibility of entrepreneurial attempts. Make it nearly impossible for anyone save a huge corporation (the SEC's Masters) to be able to compete with those already in power, unless the "usual suspects" are included. Which means you have to pay tribute to them. . There is no true freedom in this country anymore. .
Posted by: WillieG1951 | June 11, 2011 at 08:50 AM
I am not sure why one would complain about this action, if registered reps and investments firms are required to follow the rules then so should others. Yes the SEC has dropped the ball that caused serious losses for some, however the enforcement division recovers significant funds from defunct and poorly managed investment firms yearly.
How do you balance consumer confidence in the markets with the capitalism of free markets? That said, if these two had actually received money from all of these people everyone would be asking why the SEC did not stop them.
Damned if you do, damned if you don't
onevoiceonelife.wordpress.com
Posted by: 4Life | June 10, 2011 at 11:40 AM
Entrepreurial USA citizens beware, the SEC is looking for unauthorized would-be innovators and active prosperity seekers who engage in planning activities. Contemplating ideas and organizing participants without SEC authorization will get you on their list of targets - even before any money changing hands.
Take the SEC and the SECret agenda seriously. You've been served notice and warned.
Financial Stability Oversight and the suppressive new america.
Posted by: Joe Jefferis | June 10, 2011 at 09:40 AM
This mores than makes up for screwing up the Madoff fraud.
Posted by: P.T. Barnum | June 10, 2011 at 08:29 AM