Ernst and Ernst v. Hochfelder
In Ernst & Ernst v. Hochfelder, 425 U.S. 185 (1976), the U.S. Supreme Court held that to establish liability under the securities laws, § 10(b) and Rule 10b-5, a private plaintiff must prove that the defendant acted with scienter, "a mental state embracing intent to deceive, manipulate, or defraud." Id. at 193-194, and n. 12. The Court reversed a judgment based on evidence that lacked this proof.