1) What is the major difference between the Securities Act of 1933 & 1934? 2) Wh
ID: 2471080 • Letter: 1
Question
1) What is the major difference between the Securities Act of 1933 & 1934?
2) Why is it that many commentators have stated that The 1933 act requirement created the profession of Certified Public Accountancy?
3) Harry and Moe decide to form a corporation by transferring $50,000 each in exchange for corporate stock.
a) Does the stock qualify as an Exempt Security?
b) Does this qualify as an Exempt Transaction?
c) If you answer "yes" to a or b above, which exemption specifically applies?
4) What are the defenses a CPA firm might use if accused of violating the 1933 Act? Thanks!
Explanation / Answer
1)
a) The Securities Act of 1933 is created to prohibit various forms of fraud and to stabilize the securities industry by requiring that investors received financial and other significant information concerning the securities being offered for public sale.
b) The Securities Exchange Act of 1934 provides for the regulation and registration of securities exchanges, brokers, dealers and national securities associations.
2)
It is because part of the contents of the registration statement is to require an independent CPA firm certifies the corporation’s financial statements before they could offer the security to the public.
3)
No, No
4) Auditor’s arguments as defences against a breach of contract suit:
Auditor exercised due professional care in accordance with contract
Client was contributory negligent
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