[Anonymous]

I just want to make sure this is right, do the following terms mean the same thing? Scienter, reckless disregard for the truth, constructive fraud, gross neglience

[floacct]

Constructive fraud and gross negligence are basically the same thing. Scienter is the intent to deceive where as reckless disregard for the truth means publishing (in financial statements) important information based on someones word (management) with out verifying that it is correct. Scienter is an element of fraud and reckless disregard is an element of gross negligence.

[Anonymous]

So basically scienter is in its own category and reckless disregard, constructive fraud, and gross negligence are the same?

[floacct]

I wouldn't say that exactly. Reckless disregard must be present in order to have gross negligence. But it is only one of the requirements, u also need material misrepresentation of fact, reliance, intent to rely, and damages. Gross neg and constructive fraud are the same thing for cpa exam purposes. Concerning scienter, that is one element of actual fraud.

[Anonymous]

Okay cool. Thanks man.

[Author]

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