The U.S. Supreme Court ruled in 1976 in Hochfelder v. Ernst & Ernst that before CPAs could be held liable for Rule 10b-5 of the Securities Exchange Act of 1934, the auditor's ________ would be required to be shown to the court.

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The Supreme Court ruled that for CPAs to be held liable for Rule 10b-5, it would be necessary to show knowledge and intent to deceive, which is a higher standard than ordinary negligence or gross negligence. Financial gain at the expense of the plaintiff is not a requirement for liability under Rule 10b-5.

The US Supreme Court Ruled in 1976 in Hochfelder V