Under the Liability Provisions of Section 11 of the Securities

question 23

Multiple Choice

Under the liability provisions of Section 11 of the Securities Act of 1933, a CPA may be liable to any purchaser of a security for certifying materially misstated financial statements that are included in the security's registration statement. Under Section 11, a CPA usually will not be liable to the purchaser:

• A)if there is contributory negligence on the part of the purchaser.
• B)if the CPA can prove due diligence.
• C)unless the purchaser can prove privity with the CPA.
• D)unless the purchaser can prove scienter on the part of the CPA.

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Definitions:

Courses of Action

Alternative strategies or paths that can be taken in response to a situation or to achieve a specific goal.

Reasoned Decision-Making Model

A structured approach to making decisions by evaluating options, considering consequences, and applying logical analysis.

Commonsense Morality

Ethical principles and judgments that are widely shared and intuitively understood by people within a society.

Steering Documents

Official papers that guide or direct policy, strategy, and other administrative actions.