Hamish invested in the securities of the ABC Corporation (ABC).He lost a great deal of money on those securities after ABC's president admitted that financial statements about the profitability of ABC had been materially exaggerated.Andy Accountant (AA)had audited those statements and had issued an unqualified opinion that they complied with GAAS and GAAP.Hamish has sued AA using Section 10(b)of the Securities Exchange Act of 1934 as the legal basis of his/her suit.To succeed,Hamish must prove that:

Question

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It is required that the defendant (professional)has acted with scienter in order to prove liability of the defendant to a third person (nonclient)under Securities Exchange Act Rule 10b-5,pursuant to Section 10(b)of Securities Exchange Act of 1934.

Hamish Invested in the Securities of the ABC Corporation (ABC)