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:

Digital Accessories

Electronic ancillary equipment that supports and enhances the use of primary digital devices such as computers, smartphones, and tablets.

Factoring

A financial transaction where a business sells its accounts receivable to a third party at a discount, in exchange for immediate money.

Venture Capitalism

A form of private equity financing that investors provide to startup companies and small businesses believed to have long-term growth potential.

Spin-Off

A type of corporate restructuring where a division or subsidiary becomes an independent company.