Big Apple Consulting USA, Inc., provided small publicly traded companies with a variety of services, including marketing, business planning, and Web site development and maintenance. CyberKey Corp. sold customizable USB drives. CyberKey falsely informed Big Apple that CyberKey had been awarded a $25 million contract with the Department of Homeland Security. Big Apple used this information in aggressively promoting CyberKey's stock and was compensated for the eort in the form of CyberKey shares.
When the Securities and Exchange Commission (SEC) began to investigate, Big Apple sold its shares for $7.8 million. The SEC filed an action in a federal district court against Big Apple, alleging a violation of the Securities Act of 1933. Can liability be imposed on a seller for a false statement that was made by someone else? Explain.