No Private Right of Action under Section 47(b) of the Investment Company Act The Investment Lawyer

Partners Anthony (Tony) Zacharski and Betselot Zeleke co-authored an article for The Investment Lawyer examining the US Supreme Court’s decision in FS Credit Opportunities Corp. v. Saba Capital Master Fund, Ltd., which held that Section 47(b) of the Investment Company Act of 1940 does not create an implied private right of action to seek rescission of a contract that allegedly violates the Act.

The authors discuss the Court’s reasoning, its distinction between available remedies and private rights of action, and the implications for private enforcement under the Investment Company Act. They explain how the decision reinforces the US Securities and Exchange Commission’s primary enforcement role while potentially affecting future litigation involving closed-end funds, shareholder voting rights, and other provisions of the Act.