Texas International Speedway, Inc. (TIS), filed a registration statement and prospectus with the Securities and Exchange Commission offering a total of $4,398,900 in securities to the public. The proceeds of the sale were to be used to finance the construction of an automobile speedway. The entire issue was sold on the offering date. TIS did not meet with success, and the corporation filed a petition for bankruptcy. Huddleston and Bradley instituted a class-action suit in U.S. district court on behalf of themselves and other purchasers of TIS securities. Their complaint alleged violations of section 10(b) of the 1934 act. The plaintiffs sued most of the participants in the offering, including the accounting firm of Herman & MacLean. Herman & MacLean had issued an opinion concerning certain financial statements and a pro forma balance sheet that were contained in the registration statement and prospectus. The plaintiffs claimed that the defendants had engaged in a fraudulent scheme to misrepresent or conceal material facts regarding the financial condition of TIS, including the costs incurred in building the speedway. Herman & MacLean contended that the case should be dismissed because section 11 of the 1933 act provides an express remedy for a misrepresentation in a registration statement, so an action under section 10(b) of the 1934 act is precluded. Decide. [Herman & MacLean v. Huddleston, 459 U.S. 375]
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