Series 63 practice questionmediumMaterial Omissions
An issuer registers an offering in State Y, but fails to disclose that its major supplier is in bankruptcy. Under the USA, this omission is considered:
- AFraudulent, as it omits material information✓ Correct answer
- BAcceptable if the supplier is not named in the prospectus
- CNot a violation if the company has other suppliers
- DA minor reporting error only
Explanation
Why A — Fraudulent, as it omits material information
A major supplier's bankruptcy can be material and must be disclosed. Omission is fraudulent under Section 101. (B), (C), and (D) ignore the significance of the information to investors.
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