The first significant case under section 11 of the Securities Act of 1933 charging auditors with not conducting a reasonable investigation was
A)Rusch Factors v.Levin
B)United States v.Benjamin
C)Escott v.BarChris Construction Corp.
D)Ernst & Ernst v.Hochfelder

Question

Quizplus · Accepted Answer

The case of Escott v. BarChris Construction Corp. was the first significant case under section 11 of the Securities Act of 1933 that charged auditors with not conducting a reasonable investigation. In this case, the auditors failed to uncover material misstatements in the company's financial statements, which resulted in losses to the plaintiff investors. The court found that the auditors had not conducted a reasonable investigation and were liable for damages under section 11 of the Securities Act.

The First Significant Case Under Section 11 of the Securities