Which of the Following Is False Regarding the Private Securities

question 28

Multiple Choice

Which of the following is false regarding the Private Securities Litigation Reform Act?

• A) The act sets forth a specific set of actions and guidelines an accountant must follow after identifying a potentially illegal activity when conducting an audit.
• B) The act makes no reference to notifying the SEC of wrongdoing although it does reference notifying the applicable company's board of directors.
• C) The act states that accountants are liable for the portion of the damages for which they are responsible.
• D) In the event of a willful violation of the act, the SEC can seek an injunction against the accountant.
• E) Under the act, an accountant's silence when the accountant thinks he or she might have discovered fraud is enough to constitute aiding and abetting.

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Definitions:

Stock

An investment vehicle that denotes holding equity in a firm, granting the holder rights to a fraction of the company's assets and earnings.

Geometric Average

A method of calculating the average rate of return of a set of values that is compounded over time.

Arithmetic Average

A measure of central tendency calculated by dividing the sum of all values in a dataset by the number of values.

Geometric Average Returns

A method of calculating the average rate of return of an investment which accounts for the compound interest over time, often used to compare investment performance.