Asked by TEHREEM AHMED on Jun 03, 2024
Verified
Who amongst the following can be held liable under Section 12(a) (2) of the Securities Act of 1933?
A) A consultant who is hired by a company making a public distribution of securities to improve performance
B) An auditor who issues an opinion regarding financial statements of a company making a public distribution of securities
C) An accountant in the accounts division of a publicly traded company that is issuing new securities to the public
D) An underwriter who is involved in issuance of new securities to the public by a publicly traded company
Section 12(a)(2)
A provision under the Securities Act of 1933 that provides a remedy for investors who have been sold securities by means of a prospectus or oral communication containing a material misstatement or omission.
Securities Act of 1933
A U.S. federal law enacted to require transparency in financial statements so investors can make informed decisions regarding securities investments; it also introduced regulations to prevent fraud.
Public Distribution
The system of distributing goods and services to the public through government channels, often at subsidized rates.
- Familiarize yourself with the repercussions that securities laws (specifically, the Securities Act of 1933 and the Securities Exchange Act of 1934) have on the professional duties and liabilities of accountants.
Verified Answer
SC
Shannon ConradJun 10, 2024
Final Answer :
D
Explanation :
Underwriters can be held liable under Section 12(a) (2)of the Securities Act of 1933 because they have privity of contract with nonclients (they actively solicit sales of securities)and they have the requisite financial stake in the sale (they usually receive compensation for their services in the form of a commission or a spread).
Learning Objectives
- Familiarize yourself with the repercussions that securities laws (specifically, the Securities Act of 1933 and the Securities Exchange Act of 1934) have on the professional duties and liabilities of accountants.