The court case that established the precedent that an auditor can only be held liable to plaintiffs for fraud and gross negligence under the 1934 Act is

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The case of Ernst & Ernst v. Hochfelder, decided by the US Supreme Court in 1976, held that under Section 10(b) of the Securities Exchange Act of 1934, an auditor can only be held liable for fraud and gross negligence, not for ordinary negligence. This set the precedent for auditor liability under the Act. The other options, including the 1136 Tenants Corporation case, McKesson and Robbins case, and Ultramares Corporation case, are notable cases in auditing and accounting law but did not establish this specific precedent.

The Court Case That Established the Precedent That an Auditor