Third parties or intermediaries not otherwise directly selling securities they own may find themselves the target of the Securities and Exchange Commission for violations of Sections 5(a) and (c) of the Securities Act, namely the distribution of unregistered securities. This is particularly troublesome because violations thereof are subject to a strict liability standard, that is, intent is not element requisite to the claim.
SEC v. Murphy  stood for the proposition that a participant must be "both a 'necessary participant' and 'substantial factor' in the sales transaction." But as a result of a 1988 the case, Pinter v. Dahl  the SEC took the position that Murphy’s substantial factor analysis had been overruled by a “but for” or proximate cause analysis. As a result, in many instances, the SEC applied this “but for” standard to intermediaries or participants in assessing whether or not, for purposes of Section 5, they might be deemed to be “sellers”.
But in 2011, the Ninth Circuit clarified the matter distinguishing Pinter from Murphy. As a result, an individual’s facing allegations of Section 5 violations are subject to a calculus measuring whether or not they were in fact a substantial factor in the transaction. This is almost always a question of fact for the fact finder (jury or judge) and is not typically matter disposed of by summary judgment.
The following is a brief summary of the import of SEC v. Bagley in the context of Section 5 and the relevant standards for imposing liability on a third party intermediary or participant.