Asked by Annisa Rahma Putri on May 11, 2024
Verified
Which of the following is not a requirement in order to recover damages under Section 10(b) of the Securities Exchange Act of 1934 and the corresponding SEC Rule 10b-5?
A) Privity.
B) Scienter.
C) Fraudulent act or deception.
D) Reliance on the fraudulent statement.
E) Reliance on the statement as the cause of the plaintiff's loss.
Securities Exchange Act
A U.S. federal law enacted in 1934 to govern the trading of securities, such as stocks and bonds, in the secondary market, aiming to promote transparency, fairness, and integrity in the marketplaces.
SEC Rule 10b-5
A regulation by the Securities and Exchange Commission that prohibits fraud and misrepresentation in securities trading.
Privity
A doctrine in contract law that holds that contracts are private agreements between the parties who have mutually consented to them, and thus, only those parties have the rights and liabilities under the contract.
- Understand the specific legal standards and defenses related to accountants in the context of securities laws.
Verified Answer
GL
Gurleen LalliMay 17, 2024
Final Answer :
A
Explanation :
Privity is not a requirement to recover damages under Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5. These laws focus on fraudulent activities and deception in the securities market, requiring scienter (knowledge of wrongdoing), a fraudulent act or deception, reliance on the fraudulent statement, and reliance on the statement as the cause of the plaintiff's loss, but not privity between the parties.
Learning Objectives
- Understand the specific legal standards and defenses related to accountants in the context of securities laws.