FS Credit Opportunities Corp. v. Saba Capital Master Fund: Oral Argument

Case Summary:FS Credit Opportunities Corp. v. Saba Capital Master Fund involves a group of closed‑end investment funds, including FS Credit Opportunities Corp., that adopted “control‑share” provisions (mirroring Maryland’s Control Share Acquisition Act) to restrict the voting rights of any shareholder whose holdings would reach or exceed 10% of a fund’s voting power, which the funds said would protect long‑term investors from short‑term activist takeovers. Activist investor Saba Capital Master Fund, Ltd. acquired large positions in several of these funds and then sued in the Southern District of New York, arguing that the control‑share provisions violated section 18(i) of the Investment Company Act, which requires each share of stock to have equal voting rights, and seeking rescission of those provisions under section 47(b); the district court granted summary judgment to Saba and ordered rescission, and the Second Circuit affirmed, prompting the funds to petition the Supreme Court on whether section 47(b) creates an implied private right of action. The issue before the Supreme Court was whether section 47(b) of the Investment Company Act of 1940 itself provides an implied private right of action that allows private plaintiffs like Saba to sue to rescind contracts or provisions (here, the control‑share voting restrictions) alleged to violate the Act.