It seemed like an innovative way to buy a beer company: Start an online campaign to purchase the iconic Pabst Brewing Co. and sell shares on Facebook and Twitter to cover the $300 million cost.

Michael Migliozzi II and Brian William Flatow found 5 million people who said they would invest a total of $200 million. But the federal government halted the venture after it informed the two men of one major oversight - they neglected to register the public offering with the Securities and Exchange Commission, a violation of federal law.

The SEC said Wednesday that it reached a settlement with the two advertising executives. The men, who never collected any money, agreed to stop selling shares to the public.

The case spotlights a growing challenge for regulators, who must patrol business ventures on the Internet and ferret out scams disguised as stock offerings.

Migliozzi, 45, and Flatow, 41, neither admitted nor denied wrongdoing in agreeing to the SEC's "cease-and-desist" order. Their attorney in the case, Steven Berkowitz, didn't immediately return a telephone call seeking comment.

They launched their campaign to buy Pabst in November 2009, according to the SEC.

The company that sells Schlitz, Pabst Blue Ribbon and Old Milwaukee had been owned for about a decade by a charitable foundation and was seeking a buyer at the time.

Migliozzi and Flatow turned to crowdsourcing, the use of the Internet and social media to organize a large group of people, to raise capital. They also created the BuyaBeerCompany.com web site, which included a countdown timer showing how much money had been pledged toward.

Prospective investors were told to hold off sending money until the company had $300 million in pledges, the SEC said. Once they reached that goal, promoters would contact them to collect the money and proceed to buy Pabst. In return, investors would receive a certificate of ownership and beer equal in value to what they had contributed, according to the SEC.

The campaign drew quick interest. The web site reported receiving pledges of $14.75 million in just the first three weeks, the SEC said. The BuyaBeerCompany web site continued to seek pledges until it was taken down in April 2010.

Pabst was sold to C. Dean Metropoulos, a food industry executive, in June 2010.