Jouet Inc. hired an underwriter, a law firm, and an accounting firm to guide it through an initial public offering (IPO). Under the pressure to meet deadlines for the IPO set by Jouet, the outside entities failed to include information in the registration statement and prospectus that two of the Jouet directors owned a business that was supplying large amounts of critical materials to Jouet at a price slightly above market. The price of the Jouet issue of securities has fallen 20 percent since the securities were made public, and those who participated in the IPO are quite upset. Have the outside entities violated securities laws? If so, what law or laws? Do they have a defense? Why?