Gold, CPA, rendered an unqualified opinion on the financial statements of Eastern Power Company. Egan purchased Eastern bonds in a public offering subject to the Securities Act of 1933. The registration statement filed with the SEC included the audited financial statements. Gold is being sued by Egan under Section 11 of the Securities Act of 1933 for the misstatements contained in the financial statements. To prevail, Egan must prove:

Question

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Under Section 11 of the Securities Act of 1933, a plaintiff, such as Egan, does not need to prove scienter (intent to deceive) or reliance on the misstatements to prevail. The section imposes liability on auditors for any material misstatements in the registration statement, focusing on the accuracy of the information rather than the auditor's state of mind or the investor's reliance on the information.

Gold, CPA, Rendered an Unqualified Opinion on the Financial Statements