In the case of TSC Industries, Inc. v. Northway, Inc., 1975, the U.S. Supreme Court was tasked with determining what constitutes a "material" fact in securities fraud cases under Rule 14a-9 of the Securities Exchange Act of 1934 - which prohibits solicitation by means of any proxy statement containing false or misleading statements regarding material facts. The dispute arose when TSC Industries and National Industries proposed a merger that would result in their shareholders exchanging shares for those in National's control; however, Northway (a significant shareholder) argued that certain information had been omitted from proxy materials distributed to solicit shareholder approval for this transaction. The court ruled that an omitted fact is considered 'material' if there is a substantial likelihood that its disclosure would have significantly altered the total mix of information available to shareholders making investment decisions – not simply if it might have some bearing on their decision-making process as previously held by lower courts. This ruling clarified standards for materiality within securities law and has since served as precedent in numerous subsequent cases involving allegations about misleading or incomplete disclosures related to corporate actions such as mergers and acquisitions.

In the dissenting opinion for TSC Industries, Inc. v. Northway, Inc., Justice Marshall argued that the majority's decision to establish a strict "probability/magnitude" test for materiality in securities fraud cases was unnecessarily rigid and could potentially harm investors. He believed that this standard would make it more difficult for shareholders to prove they were misled by omissions or misrepresentations in proxy statements. Instead of focusing on whether a reasonable shareholder might have considered omitted information important when voting, he suggested courts should consider if there is any substantial likelihood that disclosure of an omitted fact would have been viewed by a reasonable investor as having significantly altered the total mix of information available. This approach emphasizes full and fair disclosure rather than trying to predict what may be significant enough to influence an investment decision.