In the Hochfelder case all of the following were factors in the case except

a. The Securities Exchange Act of 1934.

Data From Exchange Act 1934

Transcribed Image Text:

When the Securities Act was passed, the Interstate Commerce Commission ad- ministered its provisions. In 1934, Congress passed the Securities Exchange Act to regulate public security trading and create the Securities and Exchange Com- mission (SEC) to replace the Interstate Commerce Commission as the regulatory agency for those acts. Under the Securities Exchange Act, companies that are publicly held are required to file with the SEC, on a periodic basis, various types of financial information, including financial statements audited by independent public accoun- tants. Publicly held companies are those with securities listed on a national or over-the-counter exchange. For many years. it was unclear whether auditors and others were liable under a key provision of the 1934 Act for misrepresentations or omissions that were negligent but not fraudulent. In the Hochfelder case discussed later in the chapter, the U.S. Supreme Court held that scienter (an intent to manipulate, deceive, or defraud) must generally be proven to successfully litigate under this key provision of the act. Therefore, it is generally held that a standard of fraud applies under this key provision of the statute. Act. In three ways, the Securities Exchange Act is less severe than the Securities