Techub News, citing CryptoBriefing, reported that the US Supreme Court ruled by a 6-3 vote that Section 47(b) of the Investment Company Act of 1940 does not grant a private right of action. Under the decision, investors may not rely on that provision to sue for contract rescission. The Court held that the relevant enforcement authority belongs exclusively to the US Securities and Exchange Commission (SEC).
Dispute Between Saba Capital and BlackRock-Linked Funds
The ruling arose from a dispute between Saba Capital and funds associated with BlackRock. A lower court had previously allowed the lawsuit to proceed, but the US Supreme Court reversed that decision. The judgment narrows the use of Section 47(b) to the SEC enforcement framework rather than allowing private investors to directly assert claims under the provision in court.
According to the report, the decision removes an important legal tool that activist investors had used to challenge voting structures at closed-end funds. The outcome also aligns with the US Supreme Court’s recent direction of limiting private lawsuits based on federal statutes, with the central issue being whether investors can seek judicial relief directly under the Investment Company Act of 1940.