Space Trips Inc. files a registration statement with the SEC before making an offering to the general public. The registration contains false, immaterial statements of which the investors are unaware. The firm is charged with violating the Securities Act of 1933. Its best defense is

Question

Space Trips Inc. files a registration statement with the SEC before making an offering to the general public. The registration contains false, immaterial statements of which the investors are unaware. The firm is charged with violating the Securities Act of 1933. Its best defense is​

Quizplus · Accepted Answer

The best defense for Space Trips Inc. would be to argue that the untrue statements made in the registration statement were not material. Materiality refers to the importance or significance of the information that is being disclosed. If the misstatements were not material, then it is not considered a violation of the Securities Act of 1933. However, if the misstatements were found to be both false and material, the investors could have legal grounds for a lawsuit.