Global Capital Markets Center
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Professor Jim Cox 28 Hastings. L. 569 (1977) |
ABSTRACT:
Ernst & Ernst v. Hochfelder presented to the Supreme Court the most perplexing issue arising from the implied right of action under Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. The Supreme Court rejected, without qualification, a negligence standard for private litigation under Section 10(b) and Rule 10b-5. However, the significance of this case transcends its holding. Its reasoning has application to other unsettled aspects of the implied cause of action under Section 10(b). In this respect, Ernst & Ernst quite likely portends a significant restriction of the scope of Section 10(b), even in the case of intentional misbehavior. This article examines the arguments advanced in Ernst & Ernst in order to assess whether their application to other unsettled question under Section 10(b) is merited.
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