Which of the following would be auditors' most likely defense in an action brought under the Securities Exchange Act of 1934?
A) The investor did not have privity with auditors.
B) The investor did not suffer a loss based on the materially misstated financial statements.
C) The auditors acted in good faith and were not aware of the materially misstated financial statements.
D) The financial statements were not filed with the Securities and Exchange Commission.

Question

Quizplus · Accepted Answer

Under the Securities Exchange Act of 1934, auditors can defend themselves by proving they acted in good faith and were not aware of any material misstatements, as the Act requires proof of scienter (intent to deceive).

Which of the Following Would Be Auditors' Most Likely Defense