Um, it's already all about "false advertising and misrepresentation"! It's all about disclosure. Any company can choose to comply with the reporting requirements and thus "go public", whereupon anyone who wants to buy shares in the company is free to do so at any time, even with their last penny.

Even without complying with those requirements, companies can still, to a limited degree, receive investment from a certain number of non-accredited investors.

What is it, exactly, that you think the SEC regs say?