A managing underwriter in a firm-commitment IPO relies on a comfort letter from the issuer's auditor regarding financial statements in the prospectus. To what extent does the comfort letter limit underwriter liability under Section 11 of the Securities Act?

1. AProvides limited assurance on interim financials but does not relieve underwriters of due diligence for all financial disclosures✓ Correct answer
2. BIt completely eliminates underwriter liability for audited financials in the prospectus.
3. CIt transfers liability to the auditor for all financial disclosures.
4. DIt is only necessary for non-GAAP reconciliations and has no bearing on liability.

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