Quincy bought Teal Corp. common stock in an offering registered under the Securities Act of 1933. Worth & Co., CPAs, gave an unqualified opinion on Teal's financial statements that were included in the registration statement filed with the SEC. Quincy sued Worth under the provisions of the 1933 Act that deal with omission of facts required to be in the registration statement. Quincy must prove that:

Question

Quizplus · Accepted Answer

CUnder the Securities Act of 1933, to succeed in a claim against an auditor like Worth & Co., CPAs, for their role in the registration statement, Quincy does not need to prove fraudulent activity (eliminating A) or that he was in privity with Worth (eliminating D). Instead, Quincy must demonstrate that there was a material misstatement in the financial statements (B) and that he relied on Worth's opinion when deciding to invest (C). This reliance is critical because the Act is designed to protect investors by ensuring they have accurate and complete information.

Quincy Bought Teal Corp