Question

Which of the following must be proven by the plaintiff in a case against a CPA under the Section 11 liability provisions of the Securities Act of 1933?

1) The CPA knew of the misstatement.
2) The CPA was negligent.
3) Material misstatements were contained in the financial statements.
4) The unqualified opinion contained in the registration statement was relied upon by the party suing the CPA

Answer 1

In a case against a CPA under the Section 11 liability provisions of the Securities Act of 1933, the plaintiff must prove that the CPA knew of the misstatement, that the unqualified opinion was relied upon by the party suing the CPA, and that material misstatements were contained in the financial statements. Negligence does not need to be proven.

Step-by-step explanation:

In a case against a CPA under the Section 11 liability provisions of the Securities Act of 1933, the plaintiff must prove the following:

1. The CPA knew of the misstatement.
2. The unqualified opinion contained in the registration statement was relied upon by the party suing the CPA.
3. Material misstatements were contained in the financial statements.

It is not necessary to prove negligence on the part of the CPA in this case.