A defense to an action based on material omissions and untrue statements contained in a registration statement is:
A) innocent mistake.
B) due diligence.
C) constructive disclosure.
D) reasonable diligence.

Question

Quizplus · Accepted Answer

The correct defense to an action based on material omissions and untrue statements contained in a registration statement is "due diligence." This defense allows defendants (usually the issuer, underwriters, or directors) to avoid liability if they can prove that they conducted a thorough investigation into the company and believed in good faith that the statements were true and complete at the time of the offering.

A Defense to an Action Based on Material Omissions and Untrue