Herman hires Juanita as his accountant. Juanita commits negligence in preparing financial statements for a business Herman owns. Several investors rely on the financial statements and purchase shares of stock in the business. In a state that has adopted the privity rule, what result?
The privity rule holds that only the accountant's client may sue an accountant for malpractice. Therefore, any investors who rely on the incorrect financial statements are prohibited from recovering for their losses.
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Indicate whether the statement is true or false
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What will be an ideal response?
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