Question

Which of the following is the true statement with
regard to materiality under the antifraud provisions of
federal securities law?

A. Material information does not concern future
earnings that cannot be estimated with
accuracy.
B. Materiality is a function of whether a
reasonable person would attach importance to
the Information and includes the balancing of
both.the prob~bi(ity that the event may occur
and its potential impact relative to the total
company activities.

C. The SEC has ruled for administrative
convenience that any event involving less than
$100,000 Is not material.

D. The courts have ruled that any event or
information that the buyer or seller of securities
took into account is material.

Answer 1

Ans is option (d)

Explanation.

Materiality principle has governed public company disclosure under federal security law and has served market as well the investors.

The materiality principle filters out all the irrelevant information to help provide investors the information neccessary to make investment.

Any fact or information which can influence the decision making of buyer is relevant and material.