5. Who amongst the following is liable for errors in the entire Securities Act r

Question

5. Who amongst the following is liable for errors in the entire Securities Act registration statement under Section 11 of the Securities Act of 1933?

a) A consultant who is hired by a company making a public distribution of securities to improve performance.

b) An auditor who issues an opinion regarding financial statements of a company making a public distribution of securities.

c) An accountant in the accounts division of a publicly traded company which is issuing new securities to the public.

d) An underwriter who is involved in issuance of new securities to the public by a publicly traded company.

6. The _____ test permits only subscribers of a published investment newsletter to sue the publisher of the newsletter.

A.    Restatement

B.    primary benefit

C.    foreseeable users

D.    scienter

7. Under the federal tax law, what is the maximum penalty for tax fraud for individuals?

A.    Fine of $500 and imprisonment of one year

B.    Imprisonment of one year

C.    Fine of $10,000 and imprisonment of six months

D.    Fine of $250,000 and imprisonment of five years

8. Which of the following doctrines states that courts will not intervene where two litigants have engaged in wrongdoing?

A.    Restatement

B.    Respondeat superior

C.    Caveat emptor

D.    In pari delicto

9. The scienter element necessary to establish a cause of action for fraud will be satisfied if the plaintiff can establish that the:

A.    plaintiff actually relied on the defendant’s misrepresentation.

B.    plaintiff justifiably relied on the defendant’s misrepresentation.

C.    defendant made a one-off careless error.

D.    defendant made a misrepresentation with a reckless disregard for the truth.

10. A professional may delegate his/her duty to perform a contract if the:

A.    professional lacks the required educational qualifications.

B.    client has consented to such delegation.

C.    client obstructs the performance of the contract.

D.    professional wants to avoid liability in the contract.

Explanation / Answer

5.

b. An auditor who issues an opinion regarding financial statements of a company making a public distribution of securities

As the registration statement must include the audited financial statements and audior would be liable for the any error in the financial statements. Hence, Auditor is liable under section 11 of the securities act, 1933.

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