Problem

Ramon, a newly-licensed CPA, who set up an office in South Beach, had prepared financial reports as part of a proxy statement filed with the SEC for Cardozo Corporation. The reports contained false information of a material fact, because Ramon (due to lack of time) relied on last year's income statements when preparing the financials, rather than the current year; this ultimately led to a financial loss for many of the stockholders of Cardozo, who relied on the financial reports in the proxy statement when making their investment decisions. A group of Cardozo investors bring a class action lawsuit against Ramon's firm under Sec. 10b of the 1934 Securities Act and Rule 10(b)-5. What is the result of the suit? Discuss.