In April, 2016, Hughes, Inc. issued and sold 100,000 shares of stock at $ 100 per share. Deloitte prepared the registration statement for these newly issued shares to comply with the 1933 Securities Act.
Deloitte had done an audit for Hughes in 2015 and discovered deficiencies in internal controls. In that audit Deloitte's auditing team determined that three of the flaws in Hughes' internal controls constituted "reportable conditions." A reportable condition is an internal control weakness that, in the auditor's judgment, represents a "significant deficiency in the design or operation of the internal control structure, which could adversely affect the organization's ability to record, process, summarize, and report financial data consistent with the assertions of management in the financial statements."
Deloitte reported this to management, but nothing had been done to change those problems. When the April 2016 registration statement was filed, it did not contain any information about the problematic internal controls.
Assume that this lack of controls caused a substantial decline in the price of that stock and you as a purchaser of some of those shares have sued Deloitte to recover your losses. Could you win or not? Explain fully with the appropriate rule of law and a complete legal analysis.