Under the liability provisions of section 11 of the Securities Act of 1933,auditors may be liable to any purchaser of a security for certifying materially misstated financial statements that are included in the registration statement.Under section 11,auditors usually will not be liable to the purchaser
A)If auditors can show contributory negligence on the part of the purchaser.
B)If auditors can demonstrate due diligence.
C)Unless the purchaser can prove privity with auditors.
D)Unless the purchaser can prove scienter on the part of auditors.

Question

Quizplus · Accepted Answer

Under section 11 of the Securities Act of 1933, auditors may avoid liability to a purchaser if they can demonstrate due diligence. In other words, if the auditors can show that they conducted a thorough and appropriate audit, and had no reason to suspect that the financial statements they were certifying were materially misstated, they may avoid liability even if the statements turn out to be inaccurate. Contributory negligence, privity, and scienter are not relevant factors in determining auditor liability under section 11.

Under the Liability Provisions of Section 11 of the Securities