They were not selling stocks. They were offering trading in contracts for difference for said stocks. Not the stocks themselves. Huge difference. It's like you and I making a bet on the price of some asset. A contract between ourselves. The SEC feels that it has the right to barge in and get in between of that. And this company wasn't even registered in the US. I don't understand why the owners gave themselves up so quickly. They could have moved the website to another, non-US controlled TLD and continued.
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Of course you're right. I was well aware at the time of posting this that they weren't certifying ownership of actual shares in these companies. It was a combination of laziness and realizing that anyone requiring such a detailed explanation was really not qualified for the discussion.
That aside, I'm with you. I think it's ridiculous how much control the various regulating bodies have over what trades/ services/ etc are allowed between two or more agreeing parties. I can see some pros to enforcing such stringent laws (most of them having to do with protecting the ridiculously stupid from suffering the full breadth of their own ignorance), but I believe that they're FAR outweighed by the cons, and what happened with 1Broker is just another example (of many millions) of the latter.