Amicus Curiae Brief — FS Credit Opportunities Corp., et al., Petitioners v. Saba Capital Master Fund, Ltd., et al.

No. 24-345

In the Supreme Court of the United States

FS CREDIT OPPORTUNITIES CORP., ET AL., PETITIONERS

v.

SABA CAPITAL MASTER FUND, LTD., ET AL.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

BRIEF FOR THE UNITED STATES AS AMICUS CURIAE

JEFFREY B. FINNELL

Acting General Counsel

TRACEY A. HARDIN

Solicitor

JEFFREY A. BERGER

Assistant General Counsel

EZEKIEL L. HILL

Appellate Counsel

Securities and Exchange

Commission

Washington, D.C. 20549

D. JOHN SAUER

Solicitor General

Counsel of Record

MALCOLM L. STEWART

Deputy Solicitor General

MATTHEW GUARNIERI

Assistant to the Solicitor

General

Department of Justice

Washington, D.C. 20530-0001

SupremeCtBriefs@usdoj.gov

(202) 514-2217

QUESTION PRESENTED

Whether Section 47(b) of the Investment Company

Act of 1940, 15 U.S.C. 80a-46(b), gives private plaintiffs

a federal cause of action to seek rescission of contracts

that are alleged to violate the Act.

(I)

TABLE OF CONTENTS

Page

Interest of the United States....................................................... 1

Statement:

A. Legal background ............................................................. 1

B. The present controversy................................................... 4

Discussion ...................................................................................... 7

A. The Second Circuit has erred in reading Section

47(b) of the ICA to confer an implied private right

of action .............................................................................. 8

B. The question presented has divided the courts of

appeals .............................................................................. 15

C. The question presented warrants review in this

case.................................................................................... 19

Conclusion ................................................................................... 22

TABLE OF AUTHORITIES

Cases:

Alexander v. Sandoval, 532 U.S. 275 (2001) .................... 8-10

Board of Governors of Fed. Reserve Sys.

v. Investment Co. Inst., 450 U.S. 46 (1981) ........................ 2

Burks v. Lasker, 441 U.S. 471 (1979) ..................................... 3

Cort v. Ash, 422 U.S. 66 (1975) ............................................... 9

Cummings v. Premier Rehab Keller, P.L.L.C.,

596 U.S. 212 (2022)................................................................ 8

Daily Income Fund, Inc. v. Fox,

464 U.S. 523 (1984)........................................................ 2, 3, 9

Eaton Vance Senior Income Trust

v. Saba Capital Master Fund, Ltd.,

No. 2084CV01533, 2023 WL 1872102

(Mass. Super. Ct. Jan. 21, 2023) ........................................ 19

Egbert v. Boule, 596 U.S. 482 (2022) ...................................... 8

Gonzaga Univ. v. Doe, 536 U.S. 273 (2002)........................... 9

(III)

IV

Cases—Continued:

Page

Grupo Mexicano de Desarrollo S.A. v. Alliance

Bond Fund, Inc., 527 U.S. 308 (1999) ............................... 11

Health & Hosp. Corp. v. Talevski,

599 U.S. 166 (2023)................................................................ 9

Jones v. Harris Assocs. L.P., 559 U.S. 335 (2010) ............... 3

Karahalios v. National Fed’n of Fed. Emps.,

489 U.S. 527 (1989).............................................................. 11

Oxford Univ. Bank v. Lansuppe Feeder, LLC,

933 F.3d 99 (2d Cir. 2019) ............................... 6, 8, 13-15, 21

Saba Capital CEF Opportunities 1, Ltd.

v. Nuveen Floating Rate Income Fund:

No. 21-cv-327, 2022 WL 493554

(S.D.N.Y. Feb. 17, 2022), aff ’d,

88 F.4th 103 (2d Cir. 2023) ........................................ 19

88 F.4th 103 (2d Cir. 2023) ....................................... 2, 5, 7

Saba Capital Master Fund, Ltd. v. ASA Gold

& Precious Metals, Ltd., No. 24-cv-690,

2025 WL 951049 (S.D.N.Y. Mar. 28, 2025) ....................... 19

Santomenno ex rel. John Hancock Trust

v. John Hancock Life Ins. Co., 677 F.3d 178

(3d Cir.), cert. denied, 568 U.S. 978,

and 568 U.S. 979 (2012) ................................................. 15-17

Steinberg v. Janus Capital Mgmt., LLC,

457 Fed. Appx. 261 (4th Cir. 2011) .................................... 16

Touche Ross & Co. v. Redington,

442 U.S. 560 (1979).......................................................... 9, 11

Transamerica Mortg. Advisors, Inc. v. Lewis,

444 U.S. 11 (1979) ......................................................... 12, 14

UFCW Local 1500 Pension Fund v. Mayer,

895 F.3d 695 (9th Cir. 2018) .................................... 16-18, 20

United States v. National Ass’n of Sec. Dealers, Inc.,

422 U.S. 694 (1975)................................................................ 3

Ziglar v. Abbasi, 582 U.S. 120 (2017) .................................... 9

V

Statutes and regulation:

Page

Investment Advisers Act of 1940, ch. 686, Tit. II,

54 Stat. 847 (15 U.S.C. 80b-1 et seq.)................................. 14

15 U.S.C. 80b-15(b).................................................... 14, 16

Investment Company Act of 1940, ch. 686, Tit. I,

54 Stat. 789 (15 U.S.C. 80a-1 et seq.) ................................... 1

§ 30(f ), 54 Stat. 837 .......................................................... 12

§ 47(b), 54 Stat. 846 ......................................................... 14

15 U.S.C. 80a-3(a)(1) ......................................................... 1

15 U.S.C. 80a-3(b)(2) ....................................................... 18

15 U.S.C. 80a-4(3) .............................................................. 6

15 U.S.C. 80a-5(a) .............................................................. 1

15 U.S.C. 80a-6(c) .............................................................. 3

15 U.S.C. 80a-8(b) .............................................................. 3

15 U.S.C. 80a-18(i) (§ 18(i)) ........................................... 6, 7

15 U.S.C. 80a-26(f ) (§ 26(f ))............................................ 16

15 U.S.C. 80a-29(h) (§ 30(f )) ..................................... 12, 18

15 U.S.C. 80a-35(b) (§ 36(b)) .................................... 12, 18

15 U.S.C. 80a-35(b)(1)-(6) ............................................... 12

15 U.S.C. 80a-41(a) ............................................................ 3

15 U.S.C. 80a-41(d) ............................................................ 3

15 U.S.C. 80a-41(e) ............................................................ 3

15 U.S.C. 80a-46(b) (1976) .............................................. 14

15 U.S.C. 80a-46(b) (§ 47(b)) ............................... 3, 4, 6-21

15 U.S.C. 80a-46(b)(1) (§ 47(b)(1)) .......... 3, 4, 9-11, 13, 16

15 U.S.C. 80a-46(b)(2) (§ 47(b)(2)) ................. 4, 10, 11, 13

15 U.S.C. 80a-46(b)(3) (§ 47(b)(3)) ................................... 4

Investment Company Amendments Act of 1970,

Pub. L. No. 91-547, § 20, 84 Stat. 1428-1430 .................... 12

Securities Exchange Act of 1934,

15 U.S.C. 78a et seq.:

15 U.S.C. 78p(b) (§ 16(b)) ............................................... 12

VI

Statutes and regulation—Continued:

Page

15 U.S.C. 78q(a) (§ 17(a)) ................................................ 11

Small Business Investment Incentive Act of 1980,

Pub. L. No. 96-477, Tit. I, § 104, 94 Stat. 2277................. 15

42 U.S.C. 1983 .......................................................................... 9

Maryland Control Share Acquisition Act,

Md. Code Ann., Corps. & Ass’ns

§§ 3-701 to 3-710 (LexisNexis 2014 & Supp. 2024) ............ 5

§ 3-701(e)(1) (LexisNexis Supp. 2024) ............................. 5

§ 3-702(a)(1) (LexisNexis Supp. 2024) ............................. 5

§ 3-702(c)(4) (LexisNexis Supp. 2024) ............................. 5

17 C.F.R. 270.22c-1(a) ............................................................. 2

Miscellaneous:

Black’s Law Dictionary (12th ed. 2024) ............................. 11

H.R. Rep. No. 1341, 96th Cong., 2d Sess. (1980) ................ 15

6 Thomas Lee Hazen, Treatise on the Law of

Securities Regulation (8th ed. 2023) .............................. 1, 2

Restatement (Second) of Contracts (1981) ......................... 10

In the Supreme Court of the United States

No. 24-345

FS CREDIT OPPORTUNITIES CORP., ET AL., PETITIONERS

v.

SABA CAPITAL MASTER FUND, LTD., ET AL.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

BRIEF FOR THE UNITED STATES AS AMICUS CURIAE

INTEREST OF THE UNITED STATES

This brief is submitted in response to the Court’s

order inviting the Solicitor General to express the views

of the United States. In the view of the United States,

the petition for a writ of certiorari should be granted.

STATEMENT

A. Legal Background

1. The Investment Company Act of 1940 (ICA), ch.

686, Tit. I, 54 Stat. 789 (15 U.S.C. 80a-1 et seq.), regulates

mutual funds and other “investment compan[ies].” 15

U.S.C. 80a-3(a)(1). The investment companies regulated

by the ICA include both “open-end” and “closed-end” investment funds. 15 U.S.C. 80a-5(a); see 6 Thomas Lee

Hazen, Treatise on the Law of Securities Regulation

§ 20:18, at 453 (8th ed. 2023) (Hazen). An “open-end”

fund, including a typical mutual fund, continually issues

(1)

2

new shares to investors who wish to participate in the

fund and “stands ready at any time to redeem the securities as to which it is the issuer.” Board of Governors

of Fed. Reserve Sys. v. Investment Co. Inst., 450 U.S.

46, 51 (1981) (citation omitted). A “closed-end” fund, by

contrast, typically “does not issue shares after its initial

organization except at infrequent intervals and does not

stand ready to redeem its shares.” Ibid. (citation omitted). Shares in a closed-end fund instead are typically

traded “as any other corporate stock might be, that is,

on the exchanges or over-the-counter at a price established by the market.” Hazen § 20:17, at 448.

The distinction between open-end and closed-end

funds affects both how those funds invest and how their

shares are valued. When an investor redeems shares in

an open-end fund, the fund is generally obligated to buy

back the shares at a price determined by the market

value of the fund’s investment portfolio, known as “current net asset value.” 17 C.F.R. 270.22c-1(a). To ensure

that they can honor redemption requests, open-end

funds must keep sufficient capital on hand. Investment

Co. Inst., 450 U.S. at 51. Closed-end funds need not do

so and therefore have greater flexibility than open-end

funds to adopt certain investment strategies. See Saba

Capital CEF Opportunities 1, Ltd. v. Nuveen Floating

Rate Income Fund, 88 F.4th 103, 108 (2d Cir. 2023)

(Nuveen). Closed-end fund investors who wish to leave

the fund can sell their shares to other investors. Depending on market demand, shares in a closed-end fund

can trade at prices above or below the fund’s current

per-share net asset value. Ibid.

2. Both open-end and closed-end funds are typically

“created and managed by a pre-existing external organization known as an investment adviser.” Daily Income

Fund, Inc. v. Fox, 464 U.S. 523, 536 (1984). The invest-

3

ment adviser “selects the fund’s directors, manages the

fund’s investments, and provides other services.” Jones

v. Harris Assocs. L.P., 559 U.S. 335, 338 (2010) (discussing mutual funds). Because the fund “is organized by

its investment adviser,” and the adviser “provides [the

fund] with almost all management services,” the fund

and the investment adviser cannot feasibly engage in

true “arm’s-length bargaining.” Burks v. Lasker, 441

U.S. 471, 481 (1979) (citation omitted). To protect investors from the potential conflicts of interest that arise

from such arrangements, the ICA “regulates most

transactions between investment companies and their

advisers; limits the number of persons affiliated with

the adviser who may serve on the fund’s board of directors; and requires that fees for investment advice and

other services be governed by a written contract approved both by the directors and the shareholders of

the fund.” Daily Income Fund, 464 U.S. at 536-537 (citations omitted).

The ICA also requires investment companies to register with the Securities and Exchange Commission

(SEC or Commission), 15 U.S.C. 80a-8(b), and vests the

SEC with “broad regulatory authority over [their] business practices,” United States v. National Ass’n of Sec.

Dealers, Inc., 422 U.S. 694, 704-705 (1975); see id. at 705

n.13. The Commission may investigate potential ICA

violations and may bring enforcement actions before

the agency or in federal court. 15 U.S.C. 80a-41(a). In

federal court, the Commission may seek temporary and

permanent injunctive relief and civil money penalties.

15 U.S.C. 80a-41(d) and (e). The Commission may also

exempt any person, security, or transaction from “any

provision” of the ICA. 15 U.S.C. 80a-6(c).

3. This case principally concerns Section 47(b) of the

ICA, 15 U.S.C. 80a-46(b). Section 47(b)(1) states that

4

any contract that violates the ICA, or that violates any

rule, regulation, or order issued under the ICA, is generally “unenforceable by either party.” 15 U.S.C. 80a46(b)(1). That general rule is subject to an exception

that permits judicial enforcement of such a contract if

“a court finds that under the circumstances enforcement would produce a more equitable result than nonenforcement and would not be inconsistent with the

purposes of ” the ICA. Ibid.

Section 47(b)(2) states that, “[t]o the extent that a

contract described in [Section 47(b)(1)] has been performed, a court may not deny rescission at the instance

of any party unless such court finds that under the circumstances the denial of rescission would produce a

more equitable result than its grant and would not be

inconsistent with the purposes of ” the ICA. 15 U.S.C.

80a-46(b)(2). And under Section 47(b)(3), Section 47(b)

“shall not apply” to the “lawful portion of a contract to

the extent it may be severed from the unlawful portion

of the contract,” nor does Section 47(b) “preclude recovery against any person for unjust enrichment.” 15

U.S.C. 80a-46(b)(3).

B. The Present Controversy

1. Petitioners are four closed-end investment funds

organized under Maryland law and registered with the

SEC under the ICA. Pet. App. 17a, 41a; see Pet. ii, 10.

Respondent Saba Capital Master Fund, Ltd., holds

shares in each of the four petitioner funds and is managed by respondent Saba Capital Management, L.P.

Pet. App. 21a, 36a-37a. According to the parties, Saba’s

investment strategy is to acquire shares of closed-end

funds that trade at prices below the funds’ current pershare net asset values, and then to pressure the funds

to make changes that will cause share prices to rise. See

5

Pet. 12; Br. in Opp. 8-9. Petitioners assert that Saba’s

practices harm long-term investors in the funds, whereas

Saba describes itself as unlocking value for shareholders. See ibid.

Among other techniques, activist investors like Saba

may seek to force changes at the funds in which they

invest by exercising shareholder voting rights. See

Nuveen, 88 F.4th at 108; cf. Pet. App. 44a. Closed-end

funds have responded to such efforts in several ways.

Here, when Saba began to acquire substantial stakes in

the four petitioner funds, the directors of the funds

caused each one to adopt a resolution to opt into a provision of Maryland law designed to make it more difficult for outside investors to gain control of the fund

through shareholder voting rights. Pet. App. 4a-5a.

Under the Maryland Control Share Acquisition Act

(MCSAA), Md. Code Ann., Corps. & Ass’ns §§ 3-701 to

3-710 (LexisNexis 2014 & Supp. 2024), when a person

acquires shares in a Maryland corporation that would entitle that person to control at least ten percent of shareholder voting power, the person lacks voting rights “with

respect to the control shares” unless approved by a twothirds vote of other shareholders. Id. § 3-702(a)(1); see

id. § 3-701(e)(1) (defining “[c]ontrol shares”). MCSAA

applies to a closed-end investment fund registered under the ICA only if the fund’s board of directors “adopts

a resolution to be subject to [MCSAA] on or after June

1, 2000.” Id. § 3-702(c)(4).

In 2023, Saba brought this action in the United

States District Court for the Southern District of New

York. Pet. App. 15a. The complaint named as defendants the four petitioner funds, along with several other

investment funds that had likewise opted into MCSAA

after Saba had begun to acquire a position in the funds.

See id. at 4a, 16a, 37a-39a.

6

Saba’s suit relied on two provisions of the ICA: Section 47(b) (discussed above) and Section 18(i). See Pet.

App. 18a. Section 18(i) provides that, “[e]xcept * * * as

otherwise required by law, every share of stock hereafter issued by a registered management company * * *

shall be a voting stock and have equal voting rights with

every other outstanding voting stock.” 15 U.S.C. 80a18(i).1 The gravamen of Saba’s suit was that stripping

Saba’s shares of the voting rights that come with those

shares would violate Section 18(i), and that Section

47(b) “provides a private right of action” for Saba to

seek rescission of the resolutions through which the defendant funds had opted into MCSAA. Pet. App. 45a.

2. The district court granted Saba’s motion for summary judgment. Pet. App. 15a-32a. The court explained

that, under circuit precedent, Section 47(b) “creates an

implied private right of action for a party to a contract

that violates the ICA to seek rescission of that violative

contract.” Id. at 18a (quoting Oxford Univ. Bank v.

Lansuppe Feeder, LLC, 933 F.3d 99, 109 (2d Cir. 2019)).

The court also accepted the parties’ shared view that,

under Maryland law, the bylaws of a corporation “constitute a contract between the corporation * * * and its

shareholders.” Ibid. The court therefore understood

Section 47(b) to provide a mechanism through which

Saba, as a party to the defendants’ bylaws, could seek

judicial rescission of the portions of those contracts under which the funds had opted into MCSAA.

On the merits, the district court viewed the dispute

as governed by a prior Second Circuit decision holding

“that similar control share resolutions adopted by

For purposes of the ICA, each of the petitioner funds is a “registered management company.” 15 U.S.C. 80a-18(i); see 15 U.S.C.

80a-4(3) (defining “[m]anagement company”).

1

7

closed-end mutual funds violate the ICA’s requirement

‘that every share of common stock issued by a regulated

fund be “voting stock” and “have equal voting rights”

with other shares.’ ” Pet. App. 29a (quoting Nuveen, 88

F.4th at 117). Petitioners argued that, “because the

control share resolutions at issue are permissible under

Maryland law, they are ‘otherwise required by law’ and

thus safe from Section 18(i)’s mandate of equal voting

rights.” Id. at 30a (quoting 15 U.S.C. 80a-18(i)). The

court rejected that argument, observing that although

Maryland law “allows funds to adopt such control share

resolutions,” it does not require them to do so. Ibid.

The court therefore declared that the resolutions at issue violate Section 18(i), and it ordered those resolutions to be “rescinded forthwith.” Id. at 32a.

3. The court of appeals affirmed in an unpublished

summary order. Pet. App. 1a-14a. Like the district court,

the court of appeals concluded that the challenged resolutions violate Section 18(i) because they render the affected shares not “voting stock” and thereby breach the

requirement that every share have “equal voting rights

with every other outstanding voting stock.” Id. at 11a

(citation omitted); see id. at 11a-12a. The court also

found that “the district court did not abuse its discretion

by granting rescission” under Section 47(b). Id. at 13a.

The court of appeals did not otherwise address whether

Section 47(b) confers a private right of action.

DISCUSSION

Section 47(b) of the Investment Company Act,

15 U.S.C. 80a-46(b), does not authorize private suits

seeking rescission of contracts that allegedly violate the

Act. In suits that are otherwise within the purview of a

state or federal court, Section 47(b) generally renders

such contracts unenforceable and potentially subject to

8

rescission. But it does not create any freestanding

cause of action for the parties to such contracts to invoke the jurisdiction of a federal court. The Second Circuit erred in concluding otherwise in Oxford University

Bank v. Lansuppe Feeder, LLC, 933 F.3d 99 (2019), and

its approach conflicts with precedential Third and Ninth

Circuit decisions holding that Section 47(b) does not

create any implied private right of action. That conflict

on an important question of federal law warrants this

Court’s review, and this case is a suitable vehicle in

which to resolve it. Accordingly, the petition for a writ

of certiorari should be granted.

A. The Second Circuit Has Erred In Reading Section 47(b)

Of The ICA To Confer An Implied Private Right Of

Action

1. “Like substantive federal law itself, private rights

of action to enforce federal law must be created by Congress.” Alexander v. Sandoval, 532 U.S. 275, 286 (2001).

Because “creating a cause of action is a legislative endeavor,” Egbert v. Boule, 596 U.S. 482, 491 (2022), deciding whether to authorize private enforcement of a

federal statute is a task for Congress, not the federal

courts. If Congress has not created a cause of action for

private parties to enforce a particular federal statute,

one “does not exist and courts may not create one, no

matter how desirable that might be as a policy matter.”

Sandoval, 532 U.S. at 286-287. That principle is “rooted

in the Constitution’s separation of powers.” Cummings

v. Premier Rehab Keller, P.L.L.C., 596 U.S. 212, 230

(2022) (Kavanaugh, J., concurring).

The “determinative” question in a case like this one

therefore concerns “[s]tatutory intent.” Sandoval, 532

U.S. at 286. Several decades ago, this Court was willing

to presume that Congress intended to create a private

9

right of action “not explicit in the statutory text ” when

that assumption was perceived to be necessary or helpful to effectuate a statute’s purposes. Ziglar v. Abbasi,

582 U.S. 120, 132 (2017) (collecting examples). But in a

series of cases beginning in the 1970s, the Court “adopted

a far more cautious” approach to implied private rights

of action, declining to find such rights on multiple occasions and stressing that Congress should speak in “explicit terms” if it wishes to authorize private suits. Id.

at 132-133; see, e.g., Sandoval, 532 U.S. at 288-289;

Daily Income Fund, Inc. v. Fox, 464 U.S. 523, 535-536

(1984); Cort v. Ash, 422 U.S. 66, 79-85 (1975). And in the

analogous context of evaluating whether particular federal statutes create rights that may be enforced against

state and local officials under 42 U.S.C. 1983, this Court

recently reiterated that Congress must speak “unambiguously” if it wishes to create such judicially enforceable rights. Health & Hosp. Corp. v. Talevski, 599 U.S.

166, 180 (2023); cf. Gonzaga Univ. v. Doe, 536 U.S. 273,

290 (2002) (requiring “clear and unambiguous terms”).

2. Section 47(b) does not meet the “demanding bar”

for finding a private cause of action. Talevski, 599 U.S.

at 180. As a matter of text and structure, Section 47(b)

“provide[s] no indication that Congress intend[ed] to

create * * * an implied right of action” to seek either

rescission of a contract alleged to violate the ICA or a

declaration that the contract is unenforceable. Gonzaga

Univ., 536 U.S. at 286.

a. The inquiry “begin[s] with the language of the

statute itself.” Touche Ross & Co. v. Redington, 442 U.S.

560, 568 (1979). As previously explained, Section 47(b)(1)

states that a contract that violates the ICA is “unenforceable by either party * * * unless a court finds that

under the circumstances enforcement would produce a

more equitable result than nonenforcement and would

10

not be inconsistent with the purposes” of the ICA. 15

U.S.C. 80a-46(b)(1). That provision contemplates that

Section 47(b) may affect the disposition of ongoing court

proceedings between private parties. But it lacks any

“ ‘rights-creating’ language,” Sandoval, 532 U.S. at 288,

to suggest that Congress meant for Section 47(b) itself

to be the basis for initiating the suit.

Instead, Section 47(b) simply prescribes a rule of decision for contractual disputes that are otherwise properly before a court. State law may deem a contract

unenforceable on public-policy grounds when performance of the contract would violate a statute. See, e.g.,

Restatement (Second) of Contracts § 179(a) (1981) (explaining that a “public policy against the enforcement of

promises” in a contract “may be derived” from, among

other things, relevant “legislation”). Section 47(b)(1)

tracks the common law in that respect, rendering a contract that violates the ICA generally unenforceable by

either party to the contract. Thus, the defendant in a

breach-of-contract suit could invoke Section 47(b)(1) defensively to argue that the contract is unenforceable because it violates the ICA. But Section 47(b)(1)’s “unless” clause, 15 U.S.C. 80a-46(b)(1), would still permit

enforcement of such a contract under specified circumstances. And because of the supremacy of federal law,

a court may order enforcement of the ICA-violative contract under the conditions specified in Section 47(b)(1)

even if state law contains no analogous exception. The

provision thus may have an outcome-determinative effect in ordinary breach-of-contract litigation implicating the ICA. But it does not create any new, freestanding federal cause of action.

Section 47(b)(2) likewise does not authorize private

suits. That provision states that, “[t]o the extent that a

contract described in” Section 47(b)(1) “has been per-

11

formed,” the court “may not deny rescission at the instance of any party,” unless doing so would be warranted by the equities and consistent with the ICA’s

purposes. 15 U.S.C. 80a-46(b)(2). Like Section 47(b)(1),

Section 47(b)(2) contemplates an ongoing court proceeding between private parties, but it too does not use

any rights-creating language.

Rescission is an equitable remedy. See, e.g., Black’s

Law Dictionary 1565 (12th ed. 2024) (“Rescission is

generally available as a remedy or defense for a nondefaulting party and is accompanied by restitution of any

partial performance, thus restoring the parties to their

precontractual positions.”); cf. Grupo Mexicano de Desarrollo S.A. v. Alliance Bond Fund, Inc., 527 U.S. 308,

324-325 (1999) (discussing a prior case involving a bill in

equity that “stated a cause of action for the equitable

remedies of rescission * * * and restitution”). Regulating when that remedy may be available does not imply that Congress created a new federal cause of action

to seek it—just as a statutory cap on damages would not

itself be a source of private rights to sue for damages.

b. The ICA’s structure and context reinforce the

conclusion that Section 47(b) does not create any private right of action. Other ICA provisions expressly

confer private rights of action to enforce specific requirements in the Act. Those provisions demonstrate

that, “when Congress wished to provide a private * * *

remedy” to enforce the ICA, “it knew how to do so and

did so expressly.” Touche Ross & Co., 442 U.S. at 572

(drawing a similar negative inference with respect to

Section 17(a) of the Securities Exchange Act of 1934, 15

U.S.C. 78q(a)); see Karahalios v. National Fed’n of

Fed. Emps., 489 U.S. 527, 533 (1989) (observing that,

“where a statute expressly provides a remedy, courts

12

must be especially reluctant to provide additional remedies”).

As originally enacted in 1940, Section 30(f ) of the

ICA “expressly authorized private suits for damages”

against certain investment-company insiders by incorporating the private right of action in Section 16(b) of

the Securities Exchange Act of 1934, 15 U.S.C. 78p(b).

Transamerica Mortg. Advisors, Inc. v. Lewis, 444 U.S.

11, 20 (1979) (TAMA); see id. at 21 n.10; ICA § 30(f ), 54

Stat. 837; cf. 15 U.S.C. 80a-29(h). In 1970, Congress

also amended the ICA to add Section 36(b), which states

that “[a]n action may be brought * * * by a security

holder of [a] registered investment company on behalf

of such company” for breach of fiduciary duty against

the company’s investment adviser or certain affiliates. 15

U.S.C. 80a-35(b); see Investment Company Amendments Act of 1970, Pub. L. No. 91-547, § 20, 84 Stat.

1428-1430. That provision not only expressly authorizes

private parties to bring an action but also specifies the

contours of the right of action—assigning burdens of

proof, capping damages, providing for certain defenses,

etc. See 15 U.S.C. 80a-35(b)(1)-(6). Section 47(b) lacks

any analogous language. 2

3. In Oxford University Bank, the Second Circuit

held that Section 47(b) “creates an implied private right

In an amicus brief filed in 2001, the SEC took the position that

Section 47(b) confers an implied private right of action. SEC Amicus Br. at 2, Olmsted v. Pruco Life Ins. Co., 283 F.3d 429 (2d Cir.

2002) (No. 00-9511); cf. Br. in Opp. 29. The primary issue in that

case was whether other ICA provisions created implied private

rights of action; the SEC argued that they did not, but that Section

47(b) could provide an alternative basis for private enforcement in

some cases. The SEC has since reconsidered its view of Section

47(b) in light of this Court’s more recent guidance on implied private

rights to enforce federal law.

2

13

of action for a party to a contract that violates the ICA

to seek rescission of that violative contract.” 933 F.3d

at 109. The court stated that “[t]he text of § 47(b) unambiguously evinces Congressional intent to authorize

a private action” through its references to party enforcement (“ ‘unenforceable by either party’ ”) and rescission “ ‘at the instance of any party.’ ” Id. at 105

(quoting 15 U.S.C. 80a-46(b)(1) and (2)). The court understood those provisions to “presuppose[] that a party

may seek rescission in court by filing suit,” and it described the statutory language as “effectively equivalent to providing an express cause of action.” Ibid.

That reasoning is unsound. As explained above, Section 47(b)’s language makes clear that the provision

may affect the disposition of an ongoing judicial proceeding involving a contract between private parties. It

does not follow, however, that Section 47(b) itself authorizes commencement of such a proceeding. The statute is instead best read to establish federal rules of decision governing the enforceability and potential rescission of contracts made in violation of the ICA, which

rules will supersede any contrary state-law rules addressing the same subjects. If a state-law breach-ofcontract dispute is otherwise properly before a federal

court (e.g., under diversity jurisdiction), an allegedly

breaching party could assert as a defense to the contract’s enforcement that the contract violates the ICA.

If such a defense is found to have merit, Section 47(b)(2)

would govern the availability of rescission as a remedy.

The statute could equally come into play in state-court

proceedings. Whatever the forum, Section 47(b)’s language does not suggest that Congress meant to create

a new federal cause of action—much less that it did so

“unambiguously.” Oxford Univ. Bank, 933 F.3d at 105.

14

Contrary to the Second Circuit’s view, see Oxford

Univ. Bank, 933 F.3d at 106-107, this Court’s decision

in TAMA, supra, does not suggest that Section 47(b)

creates a private right of action. In TAMA, the Court

addressed a provision of the Investment Advisers Act

of 1940 (IAA), ch. 686, Tit. II, 54 Stat. 847 (15 U.S.C.

80b-1 et seq.), which was enacted alongside the ICA.

The relevant IAA provision states that “[e]very contract made in violation” of the IAA “shall be void” in

specified circumstances. 15 U.S.C. 80b-15(b). This

Court construed that provision to “fairly impl[y] a right

to specific and limited relief in a federal court,” because

by its terms the IAA provision “necessarily contemplates that the issue of voidness under its criteria may

be litigated somewhere.” TAMA, 444 U.S. at 18. The

Court observed that “[a] person with the power to avoid

a contract ordinarily may resort to a court to have the

contract rescinded and to obtain restitution.” Ibid. The

Court inferred from that established rule that Congress, in declaring certain contracts “void,” presumably

“intended that the customary legal incidents of voidness

would follow, including the availability of a suit for rescission.” Id. at 19.

When Congress enacted the ICA in 1940, Section

47(b) of that law likewise declared that contracts made

in violation of the ICA were “void.” See ICA § 47(b), 54

Stat. 846 (“[e]very contract made in violation of any provision of [the ICA] * * * shall be void”). The ICA still

used that language in 1979, when this Court decided

TAMA. See 15 U.S.C. 80a-46(b) (1976). The decision in

TAMA thus suggests that the then-current version of

Section 47(b) likewise authorized private suits.

In 1980, however, Congress amended Section 47(b)

to its present form, eliminating the prior directive that

contracts made in violation of the ICA “shall be void,”

15

and specifying instead the circumstances in which such

contracts are “unenforceable” and potentially subject to

rescission. Small Business Investment Incentive Act of

1980, Pub. L. No. 96-477, Tit. I, § 104, 94 Stat. 2277. For

purposes of construing Section 47(b) of the ICA, that

change rendered inapposite the TAMA Court’s construction of the “shall be void” language in the IAA.

And a committee report stating that lawmakers “expect[ed] the courts to imply private rights of action” under the 1980 amendments, Oxford Univ. Bank, 933 F.3d

at 107 (citation omitted), cannot supply a cause of action

not found in Section 47(b)’s current text.3

B. The Question Presented Has Divided The Courts Of

Appeals

The question whether Section 47(b) creates an implied private right of action has divided the courts of appeals. In Oxford University Bank, the Second Circuit

acknowledged that its recognition of an implied private

right of action in Section 47(b) conflicted with the Third

Circuit’s decision in Santomenno ex rel. John Hancock

Trust v. John Hancock Life Ins. Co., 677 F.3d 178, cert.

denied, 568 U.S. 978, and 568 U.S. 979 (2012). See Oxford Univ. Bank, 933 F.3d at 108-109. The Ninth Circuit has also concluded in a precedential decision that

In any event, the specific discussion of Section 47(b) in the committee report cited in Oxford University Bank confirms that legislators were seeking to clarify the availability of the “equitable rescission remedy,” including by giving courts a measure of discretion

to enforce a contract even when the contract violates the ICA. H.R.

Rep. No. 1341, 96th Cong., 2d Sess. 27 (1980); see id. at 37. The

report’s discussion of Section 47(b) contains no reference to implied

private rights of action, which the report mentions only in the

broader context of a discussion of private enforcement of the securities laws. See id. at 28-29.

3

16

Section 47(b) does not create any implied private right

of action. See UFCW Local 1500 Pension Fund v.

Mayer, 895 F.3d 695, 700 (2018). The Fourth Circuit

has likewise concluded, albeit in an unpublished decision, that “there is no private cause of action to enforce

Section 47(b).” Steinberg v. Janus Capital Mgmt.,

LLC, 457 Fed. Appx. 261, 267 (2011) (per curiam).

1. In Santomenno, the plaintiffs contended that a

life insurance company had charged retirement plans

excessive fees in violation of Section 26(f ) of the ICA, 15

U.S.C. 80a-26(f ), which requires investment companies

to charge reasonable fees. 677 F.3d at 181. The plaintiffs further contended that Section 47(b) created a private right of action under which they could “seek rescission and restitution” based on the alleged Section 26(f )

violation. Id. at 186. The Third Circuit rejected that

contention, explaining that “neither the language [of

Section 47(b)] nor the structure of the ICA” indicates

that Congress intended to create a private right of action. Id. at 187. The court observed that Congress had

authorized the Commission “to enforce all ICA provisions” and had created a “private right of action in Section 36(b).” Id. at 186. And, consistent with this Court’s

precedent, the Third Circuit reasoned that the existence of an express private right of action elsewhere in

the ICA made it “highly improbable that ‘Congress absentmindedly forgot to mention an intended private action’ ” in Section 47(b). Ibid. (citation omitted).

The Third Circuit also explained why this Court’s decision in TAMA does not control the interpretation of

Section 47(b). The Third Circuit observed that the difference between the IAA language stating that certain

contracts “shall be void,” 15 U.S.C. 80b-15(b), and the

current ICA language stating that certain contracts are

“unenforceable,” 15 U.S.C. 80a-46(b)(1), is “seemingly

17

slight” but “significant.” Santomenno, 677 F.3d at 187.

The court explained that the legal consequences of a

contract being “void[]” are not merely “defensive”—i.e.,

that voidness is not merely a defense to enforcement,

but also potentially a basis for affirmatively requesting

relief from a court, in the form of rescission or restitution. Ibid. (citation omitted). By contrast, the term

“ ‘unenforceable’ * * * carries no such legal implications” of affirmative relief. Ibid. For that reason, the

Third Circuit agreed with district courts that had previously construed Section 47(b) to create “a remedy rather than a distinct cause of action or basis of liability.”

Ibid. (citation omitted).

2. The Ninth Circuit reached a similar result in

Mayer, supra. The plaintiffs in Mayer alleged that the

defendant “had violated the conditions of [an] ICA exemption” issued by the Commission and thus “had been

operating as an unregistered investment company in violation of the ICA.” 895 F.3d at 698 (internal quotation

marks omitted). The plaintiffs argued that Section

47(b) “establishes a private right of action for challenging the continued validity of an ICA exemption,” and

they sought rescission of certain contracts to which the

defendant was a party. Ibid.; see id. at 699-700.

The Ninth Circuit affirmed the dismissal of the plaintiffs’ suit. See Mayer, 895 F.3d at 698, 701. The court

observed that “ ‘nothing in the text of [Section 47(b)]

makes any mention’ ” of a private right of action and

that the provision “on its face merely establishes what

it says: that contracts formed in violation of the ICA

are usually unenforceable.” Id. at 700 (citation omitted). In other words, the court explained, Section 47(b)

lacks the “rights-creating language” that a statute

“must use” to authorize private suits. Id. at 699. The

court also observed that Congress has empowered “the

18

SEC to enforce all of the provisions of the statute by

granting the SEC broad authority to investigate suspected violations; initiate actions in federal court for injunctive relief or civil penalties; and create exemptions

from compliance with any ICA provision.” Id. at 701

(brackets and citation omitted). And, pointing to Sections 30(h) and 36(b), the court noted that Congress has

expressly authorized “private suits for damages against

insiders of closed-end investment companies who make

short-swing profits,” as well as private suits against “an

investment company’s advisor and its affiliates for

breach of certain fiduciary duties.” Ibid. (citation omitted). Taken together, the court concluded, those other

provisions in the “detailed statutory scheme * * * indicate[] that Congress never intended further private enforcement of the ICA.” Ibid.

3. Respondents acknowledge (Br. in Opp. 14) that

the Second Circuit’s decision in Oxford University

Bank squarely conflicts with the Third Circuit’s decision in Santomenno. Respondents maintain (Br. in

Opp. 15-18), however, that the Ninth Circuit’s decision

in Mayer is distinguishable because the plaintiffs in that

case invoked Section 47(b) to challenge the validity of

an SEC-granted exemption—an issue over which the

SEC has exclusive enforcement authority. See 15

U.S.C. 80a-3(b)(2). That proposed distinction does not

withstand scrutiny. Although the Ninth Circuit recognized that only the SEC may seek redress when “companies * * * contravene the conditions of ICA exemptions,” the court went on to explain “[m]ore fundamentally” that “section 47(b) does not establish a private

right of action.” Mayer, 895 F.3d at 700. In doing so,

the Ninth Circuit endorsed the Third Circuit’s reasoning in Santomenno. See id. at 700-701 & n.3.

19

C. The Question Presented Warrants Review In This Case

1. The question presented has significant practical

importance to investment companies, investment advisers, investors, and the Commission. The Second Circuit’s erroneous recognition of an implied private right

of action in Section 47(b) has allowed Saba (or Sabarelated entities) to bring numerous recent suits seeking

to rescind resolutions adopting control-share provisions

and other resolutions regarding shareholder rights.

See, e.g., Saba Capital Master Fund, Ltd. v. ASA Gold

& Precious Metals, Ltd., No. 24-cv-690, 2025 WL

951049 (S.D.N.Y. Mar. 28, 2025); Saba Capital CEF Opportunities 1, Ltd. v. Nuveen Floating Rate Income

Fund, No. 21-cv-327, 2022 WL 493554 (S.D.N.Y. Feb.

17, 2022), aff ’d, 88 F.4th 103 (2d Cir. 2023); Eaton Vance

Senior Income Trust v. Saba Capital Master Fund,

Ltd., No. 2084CV01533, 2023 WL 1872102 (Mass. Super.

Ct. Jan. 21, 2023); cf. Br. in Opp. 30 (stating that, since

Oxford University Bank, “it appears that Saba is the

only party to have obtained relief under Section

47(b)(2)”). And the significance of the question presented is not limited to such suits. If Section 47(b) creates a private right of action, a plaintiff could sue to

challenge contractual terms that are alleged to violate

any ICA provision, not just the Act’s provisions regarding voting rights.

Allowing such expansive private enforcement would

upset the balance that Congress struck in the ICA.

When Congress wished to permit private enforcement,

it said so expressly. Congress also authorized the SEC

to enforce the statute and to grant case-by-case exemptions from some of its requirements where appropriate.

See p. 3, supra. If private parties could invoke Section

47(b) as a freestanding cause of action, they could inter-

20

fere with the SEC’s discretionary enforcement and exemption decisions. Indeed, the plaintiffs in Mayer invoked Section 47(b) to challenge an investment fund’s

compliance with the terms of an SEC-granted exemption. See 895 F.3d at 697-698.

Respondents observe that, if Section 47(b) creates a

private right of action, rescission would be available

only with respect to “illegal contracts.” Br. in Opp. 27

(emphasis omitted). It is true that the defendant in such

a suit could always argue that no relief is warranted because the contract complies with the ICA. But whenever disputes arise as to whether particular statutes are

privately enforceable, it could equally be said that private plaintiffs will (or should) ultimately prevail and obtain relief only if their claims are meritorious. That fact

has not led the Court to treat questions concerning the

availability of private rights of action as practically insignificant. Moreover, the ICA and its implementing

regulations are complex and technical, and the uncertainty created by the threat of litigation can itself be

harmful. In the view of the United States, private enforcement suits under Section 47(b) threaten to have an

unpredictable impact on the operations and contractual

arrangements of investment funds, including the mutual funds on which millions of Americans rely.

2. This case is an appropriate vehicle for resolving

the question presented. Although the Second Circuit

did not expressly invoke Oxford University Bank in its

summary order below, the district court correctly

treated that circuit precedent as controlling on the

question presented here, Pet. App. 18a; respondents’

complaint invokes Oxford University Bank, id. at 36a;

and there is no other apparent basis on which this case

could have proceeded in the district court if Section

47(b) does not create an implied private right of action.

21

Respondents contend (Br. in Opp. 19) that review in

this case is nonetheless unwarranted because the courts

of appeals might “harmonize their approaches if given

the chance.” But in Oxford University Bank, the Second Circuit declined to follow the Third Circuit’s Santomenno decision. See Oxford Univ. Bank, 933 F.3d at

108. Although one of those courts (or the Ninth Circuit)

could grant en banc review to change course, the courts

of appeals are presently in conflict on a significant question that is squarely presented in this case. And for the

reasons explained above, the Second Circuit’s answer to

that question is incorrect. Respondents’ speculation

(Br. in Opp. 20, 26) that the Third Circuit and other

courts might adopt the Second Circuit’s approach in the

future is not a compelling reason to deny certiorari.

Respondents also contend (Br. in Opp. 23-24) that

the Court should deny review here to permit further

consideration of the question presented by the lower

courts. But nothing about the “varied factual circumstances” (id. at 23) of this case and of Oxford University

Bank, Santomenno, and Mayer suggests that judicial

experience with future disputes would shed additional

light on the proper interpretation of Section 47(b). The

courts of appeals that have addressed the question presented have focused primarily on the text and structure

of the ICA and on this Court’s precedent, particularly

TAMA. And future plaintiffs who wish to invoke a purported private right of action under Section 47(b) will

presumably seek to file in the Second Circuit if at all

possible—as may frequently be the case, given New

York’s significant role in the financial-services industry.

There is consequently no sound reason for this Court to

defer resolution of the question presented.

22

CONCLUSION

The petition for a writ of certiorari should be

granted.

Respectfully submitted.

JEFFREY B. FINNELL

Acting General Counsel

TRACEY A. HARDIN

Solicitor

JEFFREY A. BERGER

Assistant General Counsel

EZEKIEL L. HILL

Appellate Counsel

Securities and Exchange

Commission

MAY 2025

D. JOHN SAUER

Solicitor General

MALCOLM L. STEWART

Deputy Solicitor General

MATTHEW GUARNIERI

Assistant to the Solicitor

General