Plaintiffs purchased stock of Shiloh, Inc. in the over-the-counter market. The market price subsequently went up and the plaintiffs purchased more stock. Shiloh’s profits, the economy, and general stock market prices then declined. Plaintiffs sold the stock at a loss and sued the company’s management and auditors for damages.

Required
What possible defenses might the auditors use against each of the following potential allegations the plaintiffs could make?
a. The auditors knew the statements were misleading.
b. The auditors were negligent and should have known the statements were misleading.
c. The statements were materially false and misleading.
d. Plaintiffs sustained a loss due to the false/misleading financial statements.
e. The plaintiffs are a foreseeable user; therefore, the auditors have a duty to the plaintiffs.