The Farmer’s Cooperative of Arkansas and Oklahoma Co-op (Co-op) issued notes to both members and non-members of the co-op, at an interest rate higher than that offered by local banks. The Co-op was audited by Ernst & Young (defendant), who declared that the Co-op’s assets were sound enough to issue said notes. However, in 1984, the Co-op filed for bankruptcy. The holders of the notes issued by the Co-op (Reves) (plaintiff) brought suit against Ernst & Young, arguing that Ernst & Young violated the antifraud provisions of the 1934 Act. The district court ruled in favor of Reves. Ernst & Young appealed, with the Eighth Circuit Court of appeals reversing the district court’s judgment. Reves then petitioned for certiorari to the United States Supreme Court.