Final answer:
The statutory law applicable to John Rodriguez's purchase of bonds is the Securities Act of 1933, which requires full and fair disclosure by issuers of new securities. In case of a lawsuit against the auditors, evidence of a breach of duty in detecting fraud would have to be presented. The Sarbanes-Oxley Act and the Dodd-Frank Act are other significant regulations aimed at protecting investors and reforming financial practices.
Step-by-step explanation:
The statutory law that applies to the purchase of newly issued bonds in the primary market is the Securities Act of 1933. This act governs the issuance of new securities and requires issuers to provide full and fair disclosure to potential investors. If John Rodriguez were to file a lawsuit against Fly By Night's auditors, he would likely need to prove that the auditors breached their duty by failing to detect or report fraud in the company's financial statements. Meanwhile, the response to past major accounting scandals led to the creation of the Sarbanes-Oxley Act in 2002. Designed to protect investors, the Sarbanes-Oxley Act aims to improve the accuracy and reliability of corporate disclosures made pursuant to the securities laws, and to prevent accounting fraud. The Dodd-Frank Wall Street Reform and Consumer Protection Act was enacted later, in response to the financial crisis of 2008, and sought major reform to the financial system to increase oversight and transparency.