While auditing the financial statements of Foible Corp. (which statementsare to be included in a Securities Act registration statement), Ernie, a certified public accountant, fails to review any of Foible's journal entries, does not read the minutes of the meetings of the board of directors, and does not speak with the comptroller of Foible. Consequently, Ernie does not discover that substantial loans, which went unmentioned in the financial statements and footnotes thereof, had been made to Foible officers. As a result, the registration statement omits any mention of the loans. Assuming the omitted fact is a material one and that Ernie is not an officer or director of Foible, does Ernie face potential liability under the Securities Act of 1933?

Answer rating: 100% (QA)

Negligence has to do with some act of omission which occurs because the person concerned has failed ... View the full answer