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Unformatted text preview: Suggest a new defense. Securities Exchange Act of 1934 Concerned primarily with ongoing reporting by companies whose securities are listed and traded on a stock exchange. Section 18 imposes liability on any person who makes a material false or misleading statement in documents filed with the SEC. Section 10(b) and Rule 10b-5 are the greatest source of liability for auditors under this act. Securities Act of 1934 Securities Act of 1934 involves the public trading of securities 1. Section 10b-5 - interpretation has varied but most courts have construed the words to imply deception or fraud 2. differs from SEC Act of 1933 in that the plaintiff must demonstrate the following to prevail: a. owned at least one share b. a material fact was misstated in the F|S's c. sustained a loss due to reliance on the material misstated F|S's d. auditor's audited with intent and scienter 3. Auditor's defenses (same as under SEC Act of 1933) 4. Cases: Hochfelder, Solitron, McLean...
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- Fall '08