When Bringing Suit Against Auditors Under Section 10(b)of the Securities

question 97

Multiple Choice

When bringing suit against auditors under section 10(b) of the Securities Exchange Act of 1934,plaintiffs must allege and prove that

• A) The financial statements in the offering registration filing contained a material misstatement.
• B) The auditors were aware of material misstatements in the financial statements.
• C) The auditors were guilty of ordinary negligence and failed to discover material misstatements in the financial statements.
• D) The plaintiffs purchased the specific securities through a public offering and thus have a right to sue.

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Definitions:

Performance Report

A document or record that evaluates the performance of a particular aspect of a company, often comparing actual results to planned or expected outcomes.

Direct Materials Cost

The total cost of raw materials that can be directly attributed to the production process of a product.

Factory Machinery

Equipment and machines used in a factory to increase production efficiency and manufacture goods.

Factory Overhead Cost

All indirect costs associated with manufacturing, such as utilities, rent, and maintenance not directly tied to production.