Wurst & Wurst is the accounting firm that has been used by the Intercontinental Bank for over twenty years. Ben approached Alfred, a Wurst partner, at a cocktail party. Ben asked about the Bank's stability. Although Alfred knew that the bank's stock was

overvalued because of some loans to third world countries, he felt a considerable amount of loyalty to the bank for being a good customer of his accounting firm. Alfred told Ben that Wurst had just finished an audit of the bank, and that the bank was as sound as the Rock of Gibraltar. The next day Ben bought 1,000 shares of Intercontinental. One month later, the bank's losses became the subject of a major financial scandal. Ben is angry and wants to sue. Does Ben have a case?

Yes, under Rule 10b-5, an accountant may be held civilly liable for an oral misstatement as long as it is of a material fact. Ben relied on the statement made by Alfred. Alfred knew the statement was deceptive and had scienter, or knowledge of the deception. There is also a possibility that Alfred could have criminal liability for violation of Section 10b-5.