Based upon the Hochfelder case, scienter is now required for auditor liability under Section 10 of the 1934 Securities Exchange Act.

Question

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The Supreme Court in Ernst & Ernst v. Hochfelder established that scienter, or a wrongful state of mind, is required for a violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, thereby necessitating proof of intent to deceive, manipulate, or defraud for auditor liability.

Based Upon the Hochfelder Case, Scienter Is Now Required for Auditor