Adams v. Standard Knitting Mills Inc.

Standard Knitting Mills merged with Chadbourn Inc. Before the merger, Chadbourn issued a proxy statement to shareholders that was reviewed by the accounting firm Peat Marwick Mitchell & Co. (defendant). After the merger, Chadbourn's financial condition proved worse than reported. Standard's shareholders (Adams) (plaintiff) sued Peat for a material misrepresentation in the proxy statement in violation of section 14 of the Exchange Act.

Whether an outside accountant must have intended to deceive to be liable for a material misrepresentation in a proxy statement in violation of section 14 of the Securities Exchange Act.