Series 79 practice questioneasyDue Diligence Defense
During an IPO, which of the following parties can assert a due diligence defense against Section 11 liability?
- AThe issuer
- BUnderwriters✓ Correct answer
- CThe SEC
- DThe lead investor only
Explanation
Why B — Underwriters
Underwriters, but not issuers, may assert a due diligence defense if they can demonstrate reasonable investigation. The SEC and investors do not assert this defense under Section 11.
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