In the case of Virginia Bankshares, Inc. v. Sandberg et al., 1990, minority shareholders in a subsidiary bank sued its parent company and directors for violation of federal securities laws after they recommended approval of a merger at $42 per share despite allegedly believing it was worth more. The Supreme Court held that statements made by directors about reasons for their actions can be actionable under Section 14(a) of the Securities Exchange Act even if not tied to specific factual representations, as long as they are knowingly false or misleading when made. However, damages cannot be awarded without proof that the misrepresentation caused actual harm (i.e., affected the "total mix" of information available to shareholders). In this case, because there was no evidence that any shareholder voted in favor based on these alleged misrepresentations - indeed most were legally bound to vote yes regardless - no damages could be awarded.

In the dissenting opinion for Virginia Bankshares, Inc. v. Sandberg, Justice Scalia argued that minority shareholders should not be allowed to sue corporate directors for damages under federal securities laws based on misleading statements about the value of their shares in a merger deal unless they can prove actual reliance and economic loss resulting from those statements. He contended that allowing such suits without proof of causation would open up floodgates of litigation and potentially chill honest communication between directors and shareholders out of fear of legal repercussions. Furthermore, he asserted that it is Congress's role to decide whether or not to extend liability in this way rather than the court's job to interpret existing law expansively.