Which of the following would eliminate the ability of a plaintiff to prevail under Rule 10b-5?
A) No reliance by the plaintiff on the financial statements
B) a factual misrepresentation
C) the intent to deceive, manipulate, or defraud
D) damages suffered

Question

Quizplus · Accepted Answer

Rule 10b-5 requires proof of several elements, including a material misrepresentation or omission, scienter (i.e. intent to deceive), reliance by the plaintiff, damages suffered, and a causal connection between the misrepresentation or omission and the plaintiff's damages. Option A states that there was no reliance by the plaintiff on the financial statements, which would eliminate an essential element of the plaintiff's case. Therefore, without reliance, the plaintiff cannot prevail under Rule 10b-5.

Which of the Following Would Eliminate the Ability of a Plaintiff