Ernst & Ernst v. Hochfelder
United States Supreme Court
425 U.S. 185 (1976)
Relevant factsFree
Ernst & Ernst (defendant) had audited First Securities Company for over 20 years while the firm's president, Nay, secretly diverted investor (Hochfelder, plaintiffs) funds into his own account for decades; after Nay's suicide revealed the scheme, Hochfelder sued Ernst & Ernst under § 10(b), alleging the firm's failure to conduct diligent audits amounted to securities fraud. The district court ruled for Ernst & Ernst; the court of appeals reversed in the investors' favor, and Ernst & Ernst sought certiorari.
IssueFree
Whether a defendant may be found liable for securities fraud under § 10(b) of the Exchange Act absent proof of an intent to defraud.
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