Question $1(4$ points$)$

Frater bought Zimmer Corp. common stock in an offering registered under the

Securities Act of $1933.$ Baldridge & Co$.,$ CPAs, gave an unqualified opinion on

Zimmer's financial statements that were included in the registration statement filed

with the SEC. Frater sued Baldridge under the provisions of the $1933$ Act that deal

with omission of facts required to be in the registration statement. Frater must prove

that:

There was a material misstatement in the financial statements.

There were material and immaterial misstatements in the financial statements.

There was fraudulent activity by Baldridge.

Wilson was in privity with Baldridge.

There was an immaterial misstatement in the financial statements.

Wilson relied on Baldridge's opinion.