CorpComms Magazine

Two advertising executives who used Facebook and Twitter to find investors willing to cover the cost of their proposed $300 million takeover bid for Texas-based Pabst Brewing, whose portfolio includes Carling Black Label and Special Export, have been reprimanded by America's financial regulator, the US Securities & Exchange (SEC).

Five million people had pledged more than $200 million to www.buyabeercompany.com before the SEC caught up with founders Brian Flatow and Michael Migliozzi and halted the online campaign, whose progress was recorded on a 'countdown timer' on the website.

The duo had neglected to register their unique public offering with the Securities & Exchange Commission in violation of federal law, or to make necessary disclosures.

The website launched in November 2009 promising potential investors certificates of ownership and 'beer to a value equal to the amount invested' in the 165 year old brewing company Pabst. The activity continued until April 2010, when the SEC ordered the website be taken down.

The duo collected no money from the scheme, and agreed to a cease-and-desist order not to undertake any similar activity while not admitting wrongdoing.

Scott Friestad, an associate SEC enforcement director, said: 'Investors are entitled to know certain basic information about a company before being asked to invest. Just because would-be investors are being solicited online doesn't make them less deserving of the protections under our securities laws.'

By law, public stock offerings must be registered with the SEC before their promoters begin to sell shares. When they register to sell shares in a company, they must provide information about the company's financial condition and other data to help investors decide whether they should buy in.

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