Case Study: Reeves V. Ernst & Young

In the case Reeves v. Ernst & Young there was an agricultural cooperative entitled Security the Farmer’s Cooperative of Arkansas and Oklahoma that numerous members (23,000). In order to raise money to support its general business operations, they sold to investors promissory notes that were payable upon demand. This note was showcased to all including members and non-members and noted that it was an “investment program” and offered higher interest rates. Co-op accumulated more than 1,600 people that purchased the notes, totaling $10 million but later Co-op filed for bankruptcy. There was a law suit filed by a class of holders stating that there was a violation of Section 10(b) of the Securities Exchange Act of 1934. When considering the