Section 10b-5 of the Securities Act of 1934 requires that:
A) Plaintiffs must show the auditors lacked reasonable care when performing an audit.
B) Plaintiffs must show standing before bringing a lawsuit.
C) Plaintiffs must prove scienter.
D) All of the above.

Question

Quizplus · Accepted Answer

Section 10b-5 of the Securities Act of 1934 requires plaintiffs to prove scienter, which is the intent to deceive, manipulate, or defraud. This means that the plaintiffs must show that the defendant had knowledge of the false or misleading information they communicated, or at least acted recklessly in not knowing the information was false or misleading. The other options (A and B) are not related to the requirements of Section 10b-5.

Section 10b-5 of the Securities Act of 1934 Requires That