Federal Statutory Liability

Question 1

The Securities Exchange Act of 1934

Answer 1

provides for liability in the case of an intentional misrepresentation or omission of a material fact in connection with the purchase or sale of any security

Question 2

If an investor succeeds against the CPA under section 11

Answer 2

the investor would be entitled to monetary damages only as Section 11 does not provide for treble damages

Question 3

If management omits any required data or statements in the report

Answer 3

The Auditor must disclose that omission in the report

Question 4

Generally, the statute of limitations for the period to question tax returns

Answer 4

is three years after the date the return is filed or the due date, whichever is later

Question 5

the statute of limitations for the period to question tax returns

Answer 5

may be extended if the return is fraudulent or if unreported income is greater than 25% of the gross income reported

Question 6

A CPA’s defense Under Section 18 of the Securities Exchange Act of 1934

Answer 6

to show the CPA no intent to deceive and no knowledge of false statements

Question 7

what defenses are not valid under section 11

Answer 7

Contributory negligence, lack of privity, and lack of scienter