Del, an accountant, prepares for Econo Inc., a financial statement that omits a material fact. The statement is included in Econo's registration statement filed with the Securities and Exchange Commission. Fran, who relies on the statement, and Gib, who does not, each buy Econo stock. Under Section 11 of the Securities Act of 1933, Del may be liable to

Question

Quizplus · Accepted Answer

Under Section 11 of the Securities Act of 1933, anyone who buys stock based on a misleading statement or omission in a registration statement may sue for damages. Even though Gib did not rely on the statement, he is still entitled to sue as a purchaser of the stock. Therefore, Del may be liable to both Fran and Gib.

Del, an Accountant, Prepares for Econo Inc