Regulates the initial offering of securities through the mails or interstate commerce.
Companies must file registration statements, (S-1, S-2, and S-3 forms) and prospectuses which contain financial statements that have been audited by an independent C P A.
Accountants who assist in the preparation of the registration statement are civilly liable if the registration statement:
Contains untrue statements of material facts.
Omits material facts required by statute or regulation.
Omits information that if not given makes the facts stated misleading.
The term material describes the kind of information that an average prudent investor would want to have to make an intelligent, informed decision whether to buy the security.
A material fact is one that, if correctly stated or disclosed, would have deterred or tended to deter the average prudent investor from purchasing the securities in question.
Facts that tend to deter a person from purchasing a security are those that have an important bearing upon the nature or condition of the issuing corporation or its business.