Two advertising executives who used Facebook and Twitter to find investors for their proposed $300 million takeover bid for Pabst Brewing Co have been ordered not to do anything like it again by the U.S. Securities and Exchange Commission.
The regulator said Brian William Flatow and Michael Migliozzi failed to register with securities regulators and make necessary disclosures before directing investors to their website, BuyaBeerCompany.com.
According to the SEC, the men launched their website in November 2009, promising to give people hoping to invest in the maker of Pabst Blue Ribbon and Old Milwaukee beer both certificates of ownership and "beer of a value equal to the amount invested."
By February 2010, the men claimed to have raised more than $200 million through more than 5 million pledges recorded on a "countdown timer" on their website, the SEC said.
The activity continued until the website was taken down in April 2010, the SEC said. In the end, Flatow and Migliozzi collected no money, and without admitting wrongdoing agreed to a cease-and-desist order not to undertake similar activity.
"Investors are entitled to know certain basic information about a company before being asked to invest," Scott Friestad, an associate SEC enforcement director, said in a statement.
"Just because would-be investors are being solicited online doesn't make them less deserving of the protections under our securities laws."
Flatow, 41, lives in Connecticut and was president of the advertising agency The Ad Store, the SEC said. Migliozzi, 45, lives in California and owned Forza Migliozzi, also an advertising agency, it added.
Steven Berkowitz, a lawyer for the men, did not immediately return a call seeking comment. A spokesman for Woodridge, Illinois-based Pabst also did not immediately return a call.
Founded in 1844, Pabst had been the largest privately-held U.S. brewer prior to being bought last June by Metropoulos & Co, a Greenwich, Connecticut investment firm, for an undisclosed price.