TSC Industries, Inc. v. Northway, Inc. 426 U.S. 438 (1976) National bought 34% of TSC's stock. They then put their own people on TSC's Board. Then new directors floated a plan to sell all of TSC's assets to National. They issued a joint proxy statement asking the shareholder to vote for the merger. Some TSC shareholders sued to block the merger. The shareholders argued that the proxy statement had a material omission because it failed to state that the purchase of 34% of TSC's stock gave National control of TSC. Securities Exchange Act of 1934 Rule 14a-9 prohibits the solicitation of proxies by means of materially false or misleading statements. The Trial Court found for TSC. The shareholders appealed. The Trial Court found that the omissions the shareholders were worried about were not material, and therefore not a violation of Rule 14a-9. The Appellate Court reversed. TSC appealed. The Appellate Court found that all facts that a shareholder might consider important are material. The US Supreme Court reversed. The US Supreme Court defined materiality for purposes of Rule 14a-9: There must be a substantial likelihood that a reasonable shareholder would consider it important in deciding how to vote. There must be a substantial likelihood that the disclosure of the omitted fact would have been viewed by the reasonable investor as having significantly altered the total mix of the information made available. The Court looked at the facts of this case, and found that under the standard of materiality they had established, the omissions were not material.