Exam 44: Accountants Legal Liability

Which of the following would NOT constitute scienter contributing to liability under Rule 10b-5?

Scienter is not a requirement for an accountant to be civilly liable under Rule 10b-5.

Henry prepared a registration for the first issuance of stock of the Winzell Corporation.Henry took the assignment very seriously and spent a great deal of time preparing the statement.Two years after the statement was filed, the SEC began to investigate the company and claims that the information in Henry's statement was misleading, because some of the information given to him by the corporation was false.Henry had tried to verify the information, but was not able to do so.An investor is now suing Henry claiming that he violated the 1933 act.Is Henry liable?

An accountant has a duty to comply with court orders, client requests, and Generally Accepted Auditing Standards with regards to disclosure of a client's confidential information.

Section 11 of the 1933 Securities Act imposes liability upon an accountant for negligence in the conduct of an audit.