Question

Which of the following might prevent a plaintiff investor from recovering from a defendant accountant in a Section 18(a) lawsuit?

A) The document containing the false statement was not filed with the SEC.
B) The plaintiff did not read the false document.
C) The defendant established that it acted in good faith and did not know of the error in the document.
D) The plaintiff investor was not directly affected by the false statement.
E) The false statement did not have a material impact on the stock's value.

Answer 1

Various factors such as the document not being filed with the SEC, the plaintiff not reading the false document, the defendant acting in good faith, the plaintiff not being directly affected, or the false statement not having a material impact could prevent recovery in a Section 18(a) lawsuit.

Step-by-step explanation:

In a Section 18(a) lawsuit, there are several factors that might prevent a plaintiff investor from recovering from a defendant accountant. One possible factor is if the document containing the false statement was not filed with the SEC. This is because Section 18(a) of the Securities Exchange Act only applies to false statements made in documents submitted to the SEC. Another factor is if the plaintiff did not read the false document. If the plaintiff was not aware of the false statement, it may hinder their ability to recover.

Additionally, if the defendant can establish that it acted in good faith and did not know of the error in the document, it may provide a defense against liability. Furthermore, if the plaintiff investor was not directly affected by the false statement, it may be challenging for them to recover. Lastly, if the false statement did not have a material impact on the stock's value, it could also prevent the plaintiff from recovering.