Series 79 practice questioneasyUnderwriting Process
Why do underwriters conduct due diligence before an offering?
- ATo set the federal funds rate
- BTo establish a reasonable basis for the disclosure and support a due diligence defense✓ Correct answer
- CTo waive SEC registration automatically
- DTo avoid preparing a prospectus
Explanation
Why B — To establish a reasonable basis for the disclosure and support a due diligence defense
To establish a reasonable basis for the disclosure and support a due diligence defense Due diligence helps underwriters test the accuracy and completeness of offering disclosure. That process is especially important under the Securities Act liability framework.
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