Assume that a CPA firm was negligent but not grossly negligent in the performance of an engagement.Which of the following plaintiffs probably would not recover losses proximately caused by the auditors' negligence?
A) A loss sustained by a client in a suit brought under common law.
B) A loss sustained by a lender not in privity of contract in a suit brought in a state court which adheres to the Ultramares v.Touche precedent.
C) A loss sustained by initial purchasers of stock in a suit brought under the Securities Act of 1933.
D) A loss sustained by a bank named as a third-party beneficiary in the engagement letter in a suit brought under common law.
Correct Answer:
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