Series 79 practice questioneasyDue Diligence Defense
Which of the following is an example of a reasonable investigation step by an underwriter preparing for a securities offering?
- ARelying solely on management’s oral representations
- BNot reviewing material contracts referenced in the prospectus
- CAccepting unaudited financial data without inquiry
- DReading board meeting minutes for events affecting the issuer’s business✓ Correct answer
Explanation
Why D — Reading board meeting minutes for events affecting the issuer’s business
Reviewing board minutes can reveal important items affecting disclosure and is part of a reasonable investigation. The trap is to rely only on what management says or to skip critical document review.
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