Supreme Court rulingPublished · Jun 11, 2026
Private investors cannot sue under a key securities law to cancel fund contracts.
This ruling directly affects activist investors and shareholders who might want to challenge investment company contracts in court under the Investment Company Act. It also affects investment companies, which now face…
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Case record
FS Credit Opportunities Corp. v. Saba Capital Master Fund, Ltd.
Supreme Court of the United States
Decided Jun 11, 2026
Published
In FS Credit Opportunities Corp. v. Saba Capital Master Fund, Ltd., the Supreme Court reversed the Second Circuit and held that Section 47(b) of the Investment Company Act does not create an implied private right of action allowing investors to sue for rescission of contracts that allegedly violate that law. The Court reasoned that Section 47(b) is directed at courts and their remedial authority, not at conferring individual rights to sue, and that the Act's comprehensive…
The case arose when Saba Capital, an activist investment firm, sued several closed-end mutual funds after those funds adopted resolutions under Maryland law that limited the voting rights of large shareholders like Saba. Saba argued that these resolutions violated the Investment Company Act, which requires that every share of stock carry equal voting rights. Saba relied on Section 47(b) of the Act, which says a court may not deny rescission of a contract that violates the…
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Public recordSupreme Court opinion via CourtListenerJun 11, 2026