In the Ernst & Ernst v. Hochfelder case, the Supreme Court stated that Section 10(b) of the 1934 Act and SEC Rule 10b-5 apply only to intentional conduct and not to negligence.

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The Supreme Court in Ernst & Ernst v. Hochfelder held that Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5 require a showing of scienter, meaning that they apply only to intentional wrongdoing and not to mere negligence.

In the Ernst & Ernst V