Question

Business Law

21-6. Securities Act of 1933. 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 (DHS). Big Apple used this information in aggressively promoting CyberKey's stock and was compensated for the effort 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. [U.S. Securities and Exchange Commission v. Big Apple Consulting USA, Inc., 783 F.3d 786 (11th Cir. 2015)] (See Securities Act of 1933.)

Answer 1

The securities Act 1933 have been enacted by the federal government in order to protect the interest of the share holders or the investors. This also safe guards the investors from the fraudulent activities. This law ensures transparency and accuracy in the transactions. The given case highlights that the organization BA sold it share highlighting the wrong commitment or information given by the CB. The CB being the public trading company of BA, BA is responsible for any wrongful conduct. The BA has to cross verify the information and its credibility as it holds the responsibility and understands the legal implications. Considering the given circumstances the BA is responsible for the wrong information given by CK as per the standards of securities Act.