Supreme Court Bars Private ICA Rescission Suits in 6-3 Saba Capital Ruling
Updated
Updated · Newsweek · Jun 11
Supreme Court Bars Private ICA Rescission Suits in 6-3 Saba Capital Ruling
3 articles · Updated · Newsweek · Jun 11
Summary
Section 47(b) of the Investment Company Act does not let private plaintiffs sue to rescind allegedly unlawful contracts, the Supreme Court held, reversing lower courts that had backed Saba Capital.
Amy Coney Barrett’s majority said Congress did not clearly create a private right of action and that enforcement of such violations rests primarily with the SEC, not federal courts.
The case grew out of Saba’s challenge to closed-end fund measures that limited the voting power of large shareholders; the ruling narrows a tool activists used to fight fund governance rules.
Elena Kagan and Ketanji Brown Jackson dissented, warning the decision weakens investor protections and leaves more potential violations to an SEC with limited resources.
Boaz Weinstein said the ruling did not bless the funds’ conduct and that Saba will keep pressing shareholder-rights claims through other federal provisions, state law and regulatory action.