Juanita Works for Chevco but Owns No Chevco Stock

question 24

Multiple Choice

Juanita works for Chevco but owns no Chevco stock. She buys 10 shares of a new issue of company stock as a savings plan and afterward receives the signed registration statement, which contains an untrue statement of material fact. Because she works for Chevco, she recognizes the error. Can she sue the auditor?

• A) Yes, under Section 11, proof of reliance is usually not required.
• B) Yes, if she can prove she would not have bought the stock otherwise.
• C) No, because she did not rely on the statement.
• D) No, because there is no privity between Juanita and the auditor.

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