The FBI ultimately decline to arrest the executives but instead follow through with the civil fraud charges. Tar-mart's external independent directors appoint a new interim board of directors and CEO.After the civil fraud charges, the company's forensic audit revealed that the CEO and board members had engaged in numerous similar costly schemes. Part of one of the schemes involved inflating Tar-mart's earnings, as stated on Tar-mart's quarterly and annual reports filed with the SEC.By inflating these numbers, the executives reaped millions of dollars in extra bonuses.Once the total damage was known, Tar-mart had to restate earnings for five years, showing that in the 2014 to 2019 time period, Tar-mart was 18% less profitable overall than the market believed.When the news of this situation hit, Tar-mart's publicly traded stock immediately dropped 15% in value overnight and ended 2020 down 27% overall.News commentators blamed the restated earnings and executive scandals as the reason for this drop.A group of shareholders sued Tar-mart for failing to report previous payments of bribes to Canadian politicians. Their lawsuit stated they had relied on Tar-mart's earlier filings with the SEC when purchasing Tar-mart's listed securities. The shareholders argued that because of the situation, they had collectively lost millions of dollars.

11.Explain how Tar-mart violated Section 18 of the Securities Exchange Act of 1934.