Series 79 practice questionmediumDue Diligence Defense
Which of the following is a necessary step for underwriters to establish a due diligence defense under Section 11?
- AIssuing a press release regarding the offering
- BVerifying the accuracy of key disclosures through independent investigation✓ Correct answer
- CRelying only on management’s verbal assurances
- DTimely filing the registration statement with the SEC
Explanation
Why B — Verifying the accuracy of key disclosures through independent investigation
Independent verification of disclosures is necessary for the due diligence defense; press releases and verbal assurances are not sufficient. The trap is equating procedural steps with substantive diligence.
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