Paxon Laboratories filed an initial public offering of equity securities in order to raise capital to carry
Question:
Less than a year following the initial public offering, the market price of Paxon’s common stock fell over 40% upon the discovery of misstated financial information included in the audited financial statements accompanying the registration filing.Net assets and net income were both materially overstated. Hawken & Miles failed to discover these overstatements because they failed to exercise due professional care in the performance of their audit procedures.
Required:
a. Will Dean Borgg be able to bring a civil action against Hawken & Miles under the Securities Act of 1933? Why or why not?
b. Will Dean Borgg be able to bring a criminal action against Hawken & Miles under the Securities Act of 1933? Why or why not?
c. What defense may apply to Hawken & Miles?
d. What penalties may apply to Hawken & Miles if it is found that the firm violated the Securities Act of 1933?
Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial... Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...
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Step by Step Answer:
a Yes Borgg will be able to bring a civil action against Hawken Miles and will likely prevail Borgg ...View the full answer
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Related Book For 
Auditing and Assurance Services Understanding the Integrated Audit
ISBN: 978-0471726340
1st edition
Authors: Karen L. Hooks
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