The Questionable Line Between Crowdfunding And An Illegal Securities Offer; The Pabst Brewing Case Study

from the this-won't-last dept

We're certainly among those interested in various "crowdfunding" options out there for various business models, but the ones that seem to work are situations where people are buying something specific for their money, rather than buying "ownership" in a product or company. Once you're trying to sell ownership, you're basically offering equity, and I would imagine that's a huge no-no to the folks at the SEC who very, very, very carefully regulate any sort of equity offer. Mark Glaser points us to the fact that two ad agencies, upon hearing that the Pabst Brewing Company was up for sale decided to set up a website called Buy A Beer Company, with the goal of getting people to pledge a bunch of money that could be used to buy Pabst.

The website has the typical "tiered" options that we've seen from other crowdfunding offers (though, what you get at each level isn't clearly explained). I'm assuming that this is something of a PR stunt by those ad firms, but I'm wondering if they may run into some serious legal problems pretty quickly. They're basically offering unregistered securities in another company without having gone through any of the rather strict legal process required to make any sort of investment offer of this nature. Even if it is just a joke, it seems like the kind of joke that could end up with people in court.


Reader Comments (rss)

(Flattened / Threaded)

  1.  
    identicon
    Vince, Feb 25th, 2010 @ 11:07am

    They might be ok -- from the website it seems that they are not offering any ownership interest in future profits, but rather "enough beer to match your pledge" and a certificate. Thus, people paying are not "led to expect profits solely from the efforts of the promoter or a third party."

    I think this is probably a joke though. I don't see how they could actually make it work.

     

    reply to this | link to this | view in thread ]

  2.  
    icon
    Shawn Tutt (profile), Feb 25th, 2010 @ 11:19am

    The disclaimer at the bottom says "This is not a solicitation for monetary funds." Thinking this is not for real.

     

    reply to this | link to this | view in thread ]

  3.  
    identicon
    John Doe, Feb 25th, 2010 @ 11:26am

    The real question is...

    ...why would anyone want to buy Pabst, the beer or the company? :)

     

    reply to this | link to this | view in thread ]

  4.  
    identicon
    AC, Feb 25th, 2010 @ 11:28am

    Re: The real question is...

    Real men with large swinging genitalia.

     

    reply to this | link to this | view in thread ]

  5.  
    identicon
    Anonymous Coward, Feb 25th, 2010 @ 11:29am

    You Get Nothing

    My guess is that you get beer if you donate or nothing at all. "You must by 21 to donate" The tier's make it sound like you get beer in return for your money bottle, 6-pack, or case. but most likely they will not do anything and never call in those pledges

     

    reply to this | link to this | view in thread ]

  6.  
    identicon
    Anonymous Coward, Feb 25th, 2010 @ 11:33am

    Heineken? Fuck that shit! Pabst Blue Ribbon!

     

    reply to this | link to this | view in thread ]

  7.  
    identicon
    Anonymous Coward, Feb 25th, 2010 @ 11:46am

    Re:

    For such a modest price, you get a beer that you taste twice!

     

    reply to this | link to this | view in thread ]

  8.  
    icon
    Nastybutler77 (profile), Feb 25th, 2010 @ 11:56am

    Re:

    "Heineken? Fuck that shit! Pabst Blue Ribbon!"

    You beat me to it! Damn...

     

    reply to this | link to this | view in thread ]

  9.  
    icon
    Brooks (profile), Feb 25th, 2010 @ 11:59am

    Meh

    It clearly says "send no money". If and when they actually start collecting $5 from people, then *maybe* there's an issue here. Likely not even then, depending on structure.

    If they were accepting actual money, and if they were promising partial ownership in return for that money, and if they didn't screen for "sophisticated investors" first, then there might be something to see here.

     

    reply to this | link to this | view in thread ]

  10.  
    identicon
    Anonymous Coward, Feb 25th, 2010 @ 12:11pm

    Re: Re:

    (Replied to myself) Google tells me we had different references. GP had a movie reference that I've never heard of and mine was from the song "Pabst Blue Ribbon" by Ceann, that quotes the movie. That part of the song makes sense now!

    http://www.youtube.com/watch?v=_jdt36HySBs


    Side Note: Ceann has done a great job at connecting with fans, including trips to Ireland with the band (they're an Irish-American band). From what I can tell, they make most of their money touring and selling CDs, shirts, etc...

    http://www.ceannmusic.com/

     

    reply to this | link to this | view in thread ]

  11.  
    identicon
    Anonymous Coward, Feb 25th, 2010 @ 12:35pm

    Obligation?

    Are people legally obligated to honor those "pledges"? If not, then I doubt this will "end up with people in court".

     

    reply to this | link to this | view in thread ]

  12.  
    icon
    Sean T Henry (profile), Feb 25th, 2010 @ 1:07pm

    Re: The real question is...

    I drink Pabst it is good cheap beer currently it is still one of the few American beers and I believe it is union ran.

     

    reply to this | link to this | view in thread ]

  13.  
    identicon
    C'mon, Feb 25th, 2010 @ 3:05pm

    You guys kidding?

    It is brilliant.

    Nothing more to it than signing up for a newsletter. No money. Sure it would be tough to collect all that money, but think this is smart and well done and how long is not last long? It has been ongoing since November 2009.

    Go http://buyabeercompany.com Go!

     

    reply to this | link to this | view in thread ]

  14.  
    identicon
    Valto, Feb 25th, 2010 @ 11:58pm

    The line

    Crowdfunding in it's different forms for sure need some serious balancing act between, what can and can not be done. And when that model is taken even close to "investing" it gets even more difficult to find a workable model. I think in this case they should be ok.

    All the rules in the world are man made and those are created to protect and to serve the people, not to limit innovation from happening. In worst case, some regulation can even create illusion of security where it may not be the case, like risk investing.

    We believe strongly in the mega-trend of crowdsourcing and it's sub level of crowdfunding. So much that for the past two years or so we have taken the big challenge on making this available for web & mobile startups around the world.

    Because of the Line Between Crowdfunding And An Illegal Securities Offer, we have developed a very unique community fund model to achieve our goal. Also overall transparency A very big part of the whole service.

    For those interested to study this more, here some links:

    Article in TechCrunch: http://eu.techcrunch.com/2010/02/15/grow-vc-launches-aiming-to-become-the-kiva-for-tech-startups/

    Grow VC model in full detail: http://www.growvc.com/blog/2010/02/grow-vc-model-in-full-detail/

     

    reply to this | link to this | view in thread ]

  15.  
    identicon
    yozoo, Feb 26th, 2010 @ 6:51am

    Good Joke

    " it seems like the kind of joke that could end up with people in court."

    The best ones always are!

     

    reply to this | link to this | view in thread ]

  16.  
    icon
    aries (profile), Feb 26th, 2010 @ 11:52am

    wow it is fun.

     

    reply to this | link to this | view in thread ]

  17.  
    identicon
    stevef, Mar 8th, 2010 @ 3:20pm

    in repsone to the first paragraph: Countries like the UK are starting to accept crowdfunding proposals where the Crowd can buy "ownership" in a product or company. Trampoline Systems is an example... http://www.crowdfundingcentral.com

     

    reply to this | link to this | view in thread ]


Add Your Comment

Have a Techdirt Account? Sign in now. Want one? Register here
Get Techdirt’s Daily Email
Save me a cookie
  • Note: A CRLF will be replaced by a break tag (<br>), all other allowable HTML will remain intact
  • Allowed HTML Tags: <b> <i> <a> <em> <br> <strong> <blockquote> <hr> <tt>
Follow Techdirt
A word from our sponsors...
Essential Reading
Techdirt Reading List
Techdirt Insider Chat
A word from our sponsors...
Recent Stories
A word from our sponsors...

Close

Email This