Private investors cannot sue under a key securities law to cancel fund contracts.

Record source: CourtListener

(Slip Opinion) OCTOBER TERM, 2025 1 Syllabus NOTE: Where it is feasible, a syllabus (headnote) will be released, as is being done in connection with this case, at the time the opinion is issued. The syllabus constitutes no part of the opinion of the Court but has been prepared by the Reporter of Decisions for the convenience of the reader. See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337. SUPREME COURT OF THE UNITED STATES Syllabus FS CREDIT OPPORTUNITIES CORP. ET AL. v. SABA CAPITAL MASTER FUND, LTD., ET AL. CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT No. 24–345. Argued December 10, 2025—Decided June 11, 2026 The Investment Company Act (ICA) comprehensively regulates invest- ment companies. The ICA designates the Securities and Exchange Commission as its primary enforcer and expressly permits sharehold- ers and issuers of securities to enforce two of its provisions. The ques- tion presented in this case is whether Section 47(b) of the ICA im- pliedly empowers private parties to sue for rescission of any contract that allegedly violates the Act. Petitioners (“Funds”) are investment companies that manage closed- end mutual funds. These funds are “closed” because each contains a fixed number of shares issued at one time, and the price of each share is determined by trading on the open market. Respondents Saba Cap- ital Master Fund, Ltd., and Saba Capital Management, L. P., (collec- tively, Saba) engage in activist investing—a practice that involves identifying low-performing closed-end funds and purchasing a large enough stake to alter the funds’ investment strategies. The Funds are incorporated in Maryland, which has enacted the Maryland Control Share Acquisition Act (MCSAA), and have adopted resolutions opting into MCSAA provisions that limit voting rights for shareholders hold- ing a disproportionate number of shares (like activist investors) unless other shareholders approve. In June 2023, Saba sued the Funds, al- leging that the Funds’ resolutions violate the ICA’s requirement that every share of stock shall be a voting stock with equal voting rights. Saba’s suit invoked Section 47(b) of the ICA, which provides that “a court may not deny rescission” of contracts that violate the ICA “at the instance of any party” unless the court finds that doing so would be consistent with equity and the ICA’s goals. 15 U. S. C. §80a–46(b)(2). 2 FS CREDIT OPPORTUNITIES CORP. v. SABA CAPITAL MASTER FUND, LTD. Syllabus The District Court held that Section 47(b) creates an implied private right of action to sue for contract rescission and granted Saba sum- mary judgment. The Second Circuit summarily affirmed. Held: Section 47(b) of the ICA does not impliedly empower private par- ties to sue for rescission of contracts that allegedly violate the Act. Pp. 3–10. (a) Congress, not the Judiciary, decides who may enforce federal law; when Congress creates a private right of action, it usually does so ex- pressly. The Court has rejected the practice of fashioning rights of action, Alexander v. Sandoval, 532 U. S. 275, 287, because judicially created causes of action are difficult to reconcile with “ ‘the Constitu- tion’s separation of legislative and judicial power,’ ” Egbert v. Boule, 596 U. S. 482, 491. If a statute does not spell out a right of action, courts examine its text and structure to determine whether it implic- itly provides one. To create a private right, a statute must use “ ‘rights-creating’ lan- guage” aimed at protecting “ ‘a particular class of persons.’ ” Sandoval, 532 U. S., at 288–289. Language that “focus[es] on the person regu- lated rather than the individuals protected” does not suffice. Id., at 289. And the existence of an express “remedial schem[e]” elsewhere in the statute may “foreclose a private cause of action to enforce even those statutes that admittedly create substantive private rights.” Id., at 290. Pp. 3–4. (b) Section 47 of the ICA—entitled “[v]alidity of contracts”—provides that any contractual waiver of compliance with the ICA “shall be void,” §80a–46(a), and that contracts made in violation of the ICA are gener- ally unenforceable unless specific circumstances are met, §80a– 46(b)(1). Relevant here, if such a contract “has been performed, a court may not deny rescission at the instance of any party unless such court finds that under the circumstances the denial of rescission would pro- duce a more equitable result than its grant and would not be incon- sistent with the purposes of this subchapter.” §80a–46(b)(2). The phrase “rescission at the instance of any party” does not imply that private parties may sue. Section 47(b) is a “mandate directed to . . . courts,” rather than a provision that “confer[s] a right on a specified class of persons.” Thompson v. Thompson, 484 U. S. 174, 183. The key actor is a court, not an individual, §80a–46(b)(2), and it is instructed not to deny the remedy of rescission to parties who request it for per- formed contracts unless the equities and ICA’s goals favor a different result, ibid. Section 47(b)’s wording presupposes that parties are al- ready before the court and directs the court’s use of its remedial au- thority; it says nothing about individual rights. Statutory structure points in the same direction. The Securities and Exchange Commission bears primary responsibility for ensuring  Cite as: 608 U. S. ___ (2026) 3 Syllabus compliance with the ICA and may investigate and bring enforcement actions in response to violations. §80a–41(a). Congress’s decision to create a comprehensive agency enforcement scheme supports the con- clusion that private parties generally cannot enforce the ICA. North- west Airlines, Inc. v. Transport Workers, 451 U. S. 77, 94. Pp. 4–8. (c) Saba’s counterarguments are unpersuasive. The phrase “at the instance of any party” ordinarily means “at the solicitation” or “sug- gestion of,” 7 Oxford English Dictionary 1040, directing a court’s reme- dial power when a party before it is urging rescission; the phrase says nothing about conferring a right to sue in the first place. Saba’s reli- ance on Transamerica Mortgage Advisors, Inc. v. Lewis (TAMA), 444 U. S. 11, which holds that the Investment Advisers Act (IAA) creates an implied right of action based on the phrase “shall be void,” §80b– 15(b), is unavailing because Congress amended Section 47(b) in 1980, deleting the “shall be void” language on which TAMA’s reasoning turns and shifting the focus toward regulating a court’s remedial authority. Congress made these changes despite retaining the phrase “shall be void” in the immediately preceding provision, §47(a), and in the IAA itself. Changed language typically indicates changed meaning, and that is true here. Even if TAMA applied, it blesses only a “limited private remedy . . . to void an investment advisers contract,” 444 U. S., at 24 (emphasis added); Saba would wield Section 47(b) to void any type of contract that violates the ICA. TAMA is thin support for such a sweeping right. Pp. 8–10. Reversed and remanded. BARRETT, J., delivered the opinion of the Court, in which ROBERTS, C. J., and THOMAS, ALITO, GORSUCH, and KAVANAUGH, JJ., joined. KAGAN, J., filed a dissenting opinion. JACKSON, J., filed a dissenting opin- ion, in which SOTOMAYOR, J., joined, and in which KAGAN, J., joined as to Parts I and II.  Cite as: 608 U. S. ____ (2026) 1

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