Choice "D" is correct. For a CPA to be liable for damages under section 10(b) of the 1934 Act, the plaintiff must prove the following:
The plaintiff purchased or sold securities,
The defendant's material misrepresentation of fact with respect to the securities,
Scienter (intent to deceive or reckless disregard for the truth) by the defendant,
The plaintiff's justifiable reliance,
Damages incurred by the plaintiff, and
A means of interstate commerce was involved.
While a violation of GAAS might help prove fault, such a violation is not a necessary element.
