WASHINGTON (CN) – The SEC told two advertising men to stop soliciting investors on Facebook and Twitter for $300 million to buy the Pabst beer company, unless they register with the Commission and make legally required disclosures.
The SEC said defendants Michael Migliozzi II, 45, of California, and Brian William Flatow, 41, of Connecticut, consented to a cease and desist order.
The men had been directing investors to their website, BuyaBeerCompany.com.
“The stated purpose of the website was to solicit investors via crowdsourcing to invest $300 million to purchase Pabst Brewing Company (‘Pabst’) from its owner, a private charitable trust which was then looking for a buyer,” the SEC said in its cease and desist order. “Crowdsourcing is the use of social media and the Internet to organize a large group of individuals to achieve a common goal, in this instance, to raise capital.”
Migliozzi is or was managing partner and sole owner of Forza Migliozzi. Flatow is or was president of The Ad Store. Both are advertising agencies, the SEC said in its order.
“The BuyaBeerCompany.com website elicited $14.75 million in pledges during its first three weeks of operation,” the SEC said in its order.
The order continued: “The respondents announced in a subsequent February 22, 2010 press release that the BuyaBeerCompany.com website had received over $200 million in pledges from more than five million pledgors. In the same release, they also announced that their search for a firm to assist in the acquisition was under way. Flatow subsequently met with an attorney in New York on or about February 26, 2010, to discuss how to go about collecting the pledges by incorporating an acquisition vehicle. The possibility of an initial public offering was discussed.
“A March 15, 2010 article in The Daily Deal reported that Migliozzi and Flatow had retained counsel and planned to incorporate Buy a Beer Company LLC. Thus, in lieu of a certificate of ownership, pledgors would receive stock in the acquisition corporation. The entity was never incorporated.
“The BuyaBeerCompany.com website continued to solicit pledges until the Respondents took the website down in April 2010. No monies were ever collected.”