Orange is a public entity whose shares are traded on a national exchange. A Public Company Accounting
Question:
Upon the disclosure of these restatements, Orange’s stock price declined over 40 percent. Angered over this decline, investors are contemplating bringing legal action against LeGrow for failing to detect the misstatements.
Required:
a. Assume that investors are bringing suit under the Securities Act of 1933. What would investors need to demonstrate to bring suit against LeGrow under this act?
b. What is LeGrow’s potential liability to investors if LeGrow’s audit was characterized as Demonstrating
(1) Ordinary negligence,
(2) Gross negligence, or
(3) Fraud?
c. Repeat (a) and (b), assuming that investors are bringing suit under the Securities Exchange Act of 1934.
d. What are the primary differences in LeGrow’s liability to investors under the Securities Act of 1933 and the Securities Exchange Act of 1934?
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Related Book For
Auditing and Assurance Services
ISBN: 978-0077862343
6th edition
Authors: Timothy Louwers, Robert Ramsay, David Sinason, Jerry Straws
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