[Anonymous]

Can anyone explain why the answer isn’t C? I thought 10b-5 related to scienter.

What is the standard that must be established to prove a violation of the antifraud provisions of Rule 10b-

5 of the Securities Exchange Act of 1934?

A. Negligence

B. Intentional misconduct

C. Criminal intent

D. Strict liability

Answer: B – Rule 10b-5 imposes liability on any person who commits fraud when selling or purchasing securities.

Intentional misconduct, or scienter, is the intent to deceive, manipulate, or defraud.

[spartancpa15]

CPAexcel has this question and their rationale is that “criminal intent” is too harsh. The plaintiff only needs to prove the lesser violation of “intentional misconduct”, or scienter, as the rationale you mentioned says.

FAR - Aug '14 - 90
AUD - Jan '15 - 91
REG - May '15 - 93
BEC - July '15 - 85

Used CPAexcel exclusively
Master of Science in Accounting (focus in Tax) May '15

[Author]

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