Series 79 practice questioneasyDue Diligence Defense
Which of the following is a key element of the due diligence defense for underwriters under Section 11?
- AConducting a reasonable investigation of the facts stated in the registration statement✓ Correct answer
- BEnsuring the issuer’s management signs a personal guarantee
- CHolding the issuer’s stock for at least six months post-offering
- DConfirming the company has never restated financials
Explanation
Why A — Conducting a reasonable investigation of the facts stated in the registration statement
A reasonable investigation is fundamental to the due diligence defense under Section 11. Guarantees or holding periods for stock do not substitute for a thorough review of the registration statement.
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