Claire works for Mattco but owns no Mattco stock.She buys 10 shares of a new issue of company stock and afterward receives the signed registration statement,which contains an untrue statement of material fact.Because Claire works for Mattco,she recognizes the error.Can Claire sue the auditor?

Question

Quizplus · Accepted Answer

Under Section 11 of the Securities Act of 1933, there is a strict liability for material misstatements or omissions in registration statements, and reliance on the misstatement is not required. Since Claire bought the stock and later found out about the untrue statement of material fact, she can sue the auditor under Section 11.

Claire Works for Mattco but Owns No Mattco Stock