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CHAPTER 46 LEGAL AND PROFESSIONAL RESPONSIBILITIES OF AUDITORS, CONSULTANTS, AND SECURITIES PROFESSIONALS ANSWERS TO CHAPTER 46 True-False Multiple Choice 1. F 2. T 3. F 4. T 5. T 6. F 7. F 8. T 9. F 10. F 11. a 12. d 13. d 14. b 15. a 16. d 17. a 18. c 19. c 20. d Short Essay 21. A plaintiff suing under Rule 10b-5 must prove scienter (intent to deceive, manipulate, or defraud) on the part of the defendant. Mere negligence on the part of the defendant is not sufficient for the imposition of 10b-5 liability on him. If the accountant knew or should have known that his work would be distributed to potential investors, then proof that the accountant was negligent could be sufficient to enable the plaintiff to recover under state tort law, assuming that the state has departed from the narrow Ultramares doctrine. Ultramares required privity between the plaintiff and the defendant accountant, even in a negligence-based action. Of course, even if applicable state law reflects a departure from Ultramares , whether the purchaser actually would prevail in a negligence suit would depend to a great extent on which of the three tests has been established in applicable state law for the handling of nonclients' negligence suits against accountants. 22.
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This note was uploaded on 04/30/2010 for the course BUSLAW 301 taught by Professor Abu during the Spring '09 term at Abu Dhabi University.

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