Techub News, citing CryptoBriefing, reported that the U.S. Supreme Court has ruled in a 6-3 decision that Section 47(b) of the Investment Company Act of 1940 does not provide a private right of action. Under the ruling, investors may not rely on that provision to file lawsuits seeking contract rescission. The Court held that enforcement authority under the provision belongs exclusively to the U.S. Securities and Exchange Commission (SEC).
Dispute Between Saba Capital and BlackRock-Affiliated Funds
The case arose from a dispute involving Saba Capital and funds affiliated with BlackRock. A lower court had previously allowed the lawsuit to proceed, but the Supreme Court overturned that decision. The ruling clarifies that Section 47(b) cannot be used as a legal basis for private investors to bring such claims.
The decision removes an important legal tool that activist investors had used to challenge voting structures at closed-end funds. According to the report, the ruling is consistent with the Supreme Court’s recent approach of limiting private lawsuits brought under federal statutes, while keeping the relevant enforcement role within the SEC’s authority.