Question

Quincy bought Teal Corp. common stock in an offering registered under the Securities Act of 1933. Worth & Co., CPAs, gave an unqualified opinion on Teal's financial statements that were included in the registration statement filed with the SEC. Quincy sued Worth under the provisions of the 1933 Act that deal with omission of facts required to be in the registration statement. Quincy must prove that

- Quincy was in privity with Worth.- There was a material misstatement in the financial statements.- There was fraudulent activity by Worth.- Quincy relied on Worth's opinion.

Answer 1

The answer is: There was a material misstatement in the financial statements.

Step-by-step explanation:

The Securities Act of 1933 was enacted so that investors could get the financial information and other important information regarding the securities being offered for sale. It also prohibits deceit, misrepresentations, and any other type of fraud in securities' sales.

Worth is legally responsible for any misstatements it had presented over Teal's securities.