Amicus Curiae Brief — FS Credit Opportunities Corp., et al., Petitioners v. Saba Capital Master Fund, Ltd., et al.
Supreme Court briefSep 3, 2025
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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.,
Respondents.
——————————
ON WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
——————————
BRIEF OF THE CHAMBER OF COMMERCE
OF THE UNITED STATES OF AMERICA
AS AMICUS CURIAE IN SUPPORT OF
PETITIONERS
——————————
JANET GALERIA
AUDREY DOS SANTOS
U.S. CHAMBER
LITIGATION CENTER
1615 H Street, NW
Washington, DC 20062
GREGORY G. GARRE
Counsel of Record
BLAKE E. STAFFORD
CHRISTINA R. GAY
LATHAM & WATKINS LLP
555 Eleventh Street, NW
Suite 1000
Washington, DC 20004
(202) 637-2207
gregory.garre@lw.com
Counsel for Amicus Curiae
TABLE OF CONTENTS
Page
TABLE OF AUTHORITIES ...................................... ii
INTEREST OF AMICUS CURIAE ............................1
INTRODUCTION AND SUMMARY OF
ARGUMENT .........................................................2
ARGUMENT ...............................................................5
I.
No Basis Exists For Inferring A Private
Right Of Action Under Section 47(b) ....................5
A. Respect For The Separation Of Powers
Requires A Clear Indication Of
Congressional
Intent
Before
Recognizing A Private Right Of Action ..........5
B. Congress Gave No Indication That It
Intended Section 47(b) To Be Privately
Enforced .........................................................10
II. Judicially Creating An Implied Right Of
Action Under Section 47(b) Would Impose
Significant Real-World Costs .............................16
CONCLUSION ..........................................................25
ii
TABLE OF AUTHORITIES
Page(s)
CASES
Alexander v. Sandoval,
532 U.S. 275 (2001) .............. 2, 6, 10, 13, 14, 15, 16
Barr v. American Association of Political
Consultants, Inc.,
591 U.S. 610 (2020) ..............................................16
Cannon v. University of Chicago,
441 U.S. 677 (1979) ..............................................11
Corner Post, Inc. v. Board of Governors of
Federal Reserve System,
603 U.S. 799 (2024) ..............................................16
Cort v. Ash,
422 U.S. 66 (1975) ..................................................6
Cummings v. Premier Rehab Keller,
P.L.L.C.,
596 U.S. 212 (2022) ................................................6
Egbert v. Boule,
596 U.S. 482 (2022) ..........................................7, 14
Elhady v. Unidentified CBP Agents,
18 F.4th 880 (6th Cir. 2021), cert.
denied, 143 S. Ct. 301 (2022) .................................7
Jesner v. Arab Bank, PLC,
584 U.S. 241 (2018) ............................................6, 7
Johnson v. Interstate Management Co.,
849 F.3d 1093 (D.C. Cir. 2017) ..............................6
iii
TABLE OF AUTHORITIES—Continued
Page(s)
Laborers’ Local 265 Pension Fund v.
iShares Trust,
No. 13-CV-00046, 2013 WL 4604183
(M.D. Tenn. Aug. 28, 2013), aff’d, 769
F.3d 399 (6th Cir. 2014), cert. denied,
574 U.S. 1202 (2015) ............................................18
Medina v. Planned Parenthood South
Atlantic,
145 S. Ct. 2219 (2025)........................................7, 8
Middlesex County Sewerage Authority v.
National Sea Clammers Association,
453 U.S. 1 (1981) ..................................................10
Nestlé USA, Inc. v. Doe,
593 U.S. 628 (2021) ............................................6, 7
New England Telephone & Telegraph Co. v.
Public Utilities Commission,
742 F.2d 1 (1st Cir. 1984), cert. denied,
476 U.S. 1174 (1986) ..............................................8
Northwest Airlines, Inc. v. Transport
Workers Union,
451 U.S. 77 (1981) ................................................11
Oxford University Bank v. Lansuppe
Feeder, LLC,
933 F.3d 99 (2d Cir. 2019) ................... 3, 12, 13, 15
iv
TABLE OF AUTHORITIES—Continued
Page(s)
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) .....................................18
Santomenno v. John Hancock Life
Insurance Co. (U.S.A.),
677 F.3d 178 (3d Cir.), cert. denied, 568
U.S. 978 (2012).....................................................14
Staniforth v. Total Wealth Management,
Inc.,
No. 14-cv-1899, 2023 WL 3805250 (S.D.
Cal. June 2, 2023) ................................................18
Stoneridge Investment Partners, LLC v.
Scientific-Atlanta, Inc.,
552 U.S. 148 (2008) ..............................................23
Touche Ross & Co. v. Redington,
442 U.S. 560 (1979) ........................................11, 16
Transamerica Mortgage Advisors, Inc.
(TAMA) v. Lewis,
444 U.S. 11 (1979) .................................... 12, 13, 14
UFCW Local 1500 Pension Fund v. Mayer,
895 F.3d 695 (9th Cir. 2018).................... 20, 22, 23
United States v. National Association of
Securities Dealers, Inc.,
422 U.S. 694 (1975) ..............................................17
Ziglar v. Abbasi,
582 U.S. 120 (2017) ................................ 6, 7, 10, 14
v
TABLE OF AUTHORITIES—Continued
Page(s)
STATUTES
15 U.S.C. § 80a-3(a)(1)(C) ...................................17, 19
15 U.S.C. § 80a-6(c) ...................................................18
15 U.S.C. § 80a-9(b) ..................................................13
15 U.S.C. § 80a-29(h) ................................................11
15 U.S.C. § 80a-35(b) ................................................11
15 U.S.C. § 80a-35(b)(1) ............................................12
15 U.S.C. § 80a-35(b)(2) ............................................12
15 U.S.C. § 80a-35(b)(3) ............................................12
15 U.S.C. § 80a-35(b)(4) ............................................12
15 U.S.C. § 80a-35(b)(5) ............................................12
15 U.S.C. § 80a-35(b)(6) ............................................12
15 U.S.C. § 80a-41(d) .............................. 10, 13, 15, 18
15 U.S.C. § 80a-41(e) .................................................10
15 U.S.C. § 80a-46(b) ............................................3, 15
15 U.S.C. § 80a-46(b)(1) ............................................18
15 U.S.C. § 80a-48 .....................................................13
15 U.S.C. § 80b-15(b) ................................................15
vi
TABLE OF AUTHORITIES—Continued
Page(s)
OTHER AUTHORITIES
Jonathan Baird & Eric Stuart, The US
Investment Company Act: A legal
minefield for non-US issuers, PLC
Magazine (Mar. 2013),
https://www.jonesday.com//media/files/publications/2013/03/the-usinvestment-company-act-a-legalminefield-fo/files/ereadattachment/
fileattachment/ereadattachment.pdf ............17, 19
Harvey Bines & Steve Thel, The Varieties of
Investment Management Law, 21
Fordham J. Corp. & Fin. L. 71 (2016) .................18
Tamar Frankel, The Scope and
Jurisprudence of the Investment
Management Regulation, 83 Wash.
U.L.Q. 939 (2005) .................................................21
Christopher P. Healey, Updating the SEC’s
Exemptive Order Process Under the
Investment Company Act of 1940 to Fit
the Modern Era, 79 Geo. Wash. L. Rev.
1535 (2011) ...........................................................22
vii
TABLE OF AUTHORITIES—Continued
Page(s)
Letter from Ray Garrett, Jr., SEC
Chairman, to the Honorable John
Sparkman, Chairman of the Comm. on
Banking, Housing, and Urban Affairs,
United States Senate (Nov. 4, 1974),
https://www.sec.gov/divisions/
investment/report-mutual-funddistribution-22d.pdf .............................................17
Rich Lincer et al., Implied Private Right of
Action Under the Investment Company
Act, Harvard Law School Forum on
Corporate Governance (Oct. 7, 2019),
https://corpgov.law.harvard.edu/2019/10/
07/implied-private-right-of-action-underthe-investment-company-act/ ..............................19
Matthew C. Stephenson, Public Regulation
of Private Enforcement: The Case for
Expanding the Role of Administrative
Agencies, 91 Va. L. Rev. 93 (2005) ....................8, 9
U.S. Chamber Institute for Legal Reform,
Containing the Contagion: Proposals to
Reform the Broken Securities Class
Action System (Feb. 2019),
https://instituteforlegalreform.com/wpcontent/uploads/2020/10/SecuritiesClass-Action-Reform-Proposals.pdf ....................23
viii
TABLE OF AUTHORITIES—Continued
Page(s)
U.S. Chamber Institute for Legal Reform,
Ill-Suited: Private Rights of Action and
Privacy Claims (July 2019),
https://instituteforlegalreform.com/wpcontent/uploads/2020/10/Ill-Suited__Private_RIghts_of_Action_and_Privacy
_Claims_Report.pdf .........................................9, 23
INTEREST OF AMICUS CURIAE1
The Chamber of Commerce of the United States of
America is the world’s largest business federation. It
represents approximately 300,000 direct members
and indirectly represents the interests of more than
three
million
companies
and
professional
organizations of every size, in every industry sector,
and from every region of the country. An important
function of the Chamber is to represent the interests
of its members in matters before Congress, the
Executive Branch, and the courts. To that end, the
Chamber regularly files briefs as amicus curiae in
cases, like this one, that raise issues of concern to the
Nation’s business community.
The Chamber has a strong interest in this case
because private litigation under Section 47(b) of the
Investment Company Act (ICA) imposes a substantial
burden on business. Section 47(b) permits the
rescission of contracts made in violation of the ICA, a
statute that governs “investment companies” with
extensive and far-reaching requirements. Many
businesses are registered under the ICA and subject
to its demands, while others risk inadvertently
becoming “investment companies” subject to SEC
registration and oversight. The scope of the ICA’s
reach is therefore critically important.
The question in this case is whether Section 47(b)
of the ICA confers a private right of action. The
answer is no. The text of the statute that Congress
1 No counsel for any party authored this brief in whole or in
part, and no entity or person, aside from amicus curiae, its
members, or its counsel, made a monetary contribution intended
to fund the brief’s preparation or submission.
2
enacted does not express such a private right, and
judicial implication of such a right would contravene
the structure of the ICA. This Court has admonished
that courts should not venture beyond Congress’s
intent when it comes to private rights of action. And
doing so here would be particularly problematic.
Recognizing such a right would unleash crippling and
unchecked private lawsuits aimed at enforcing the
ICA’s extensive requirements and seeking to rescind
vital business contracts.
And arming private
individuals to bring such actions would create
significant regulatory uncertainty and undermine the
SEC’s role as the congressionally selected enforcer of
the ICA.
The Chamber and its members have a strong
interest in restraining such regulatory overreach and
ensuring that the statute Congress enacted is
enforced consistently with its terms.
INTRODUCTION AND
SUMMARY OF ARGUMENT
The central question in this case—whether the
Second Circuit properly inferred a private right of
action under the Investment Company Act (ICA)—
was, for all intents and purposes, decided long ago.
Over four decades ago, this Court “swor[e] off the
habit of venturing beyond Congress’s intent” to
recognize implied private rights of action to enforce
federal law, and it has repeatedly rebuffed
“invitation[s] to have one last drink” ever since.
Alexander v. Sandoval, 532 U.S. 275, 287 (2001). The
Court today correctly recognizes that it is the role of
Congress, not the courts, to create causes of action.
Under this approach, the judiciary’s sole task is to
interpret the statutes Congress has enacted to
3
determine whether they display an intent to create a
private right of action, and no more. Application of
this now settled rule makes this an easy case.
The statute at issue here—Section 47(b) of the
ICA, 15 U.S.C. § 80a-46(b)—displays no such intent.
The statutory text does not even hint at a private
right of action. That is the end of the inquiry. But
the statute’s structure confirms that this omission
was deliberate. The Second Circuit nevertheless
recognized an implied private right of action based
solely on strained inferences and conjecture about the
significance of post-enactment amendments. See
Oxford Univ. Bank v. Lansuppe Feeder, LLC, 933 F.3d
99, 106-09 (2d Cir. 2019). The Second Circuit’s
position defies Section 47(b)’s text and structure,
which clearly foreclose any recognition of such a right.
The Second Circuit’s decision to recognize a
private right also contravenes fundamental
separation-of-powers principles central to the
Constitution’s design. These principles are wellrehearsed in this Court’s decisions. Crafting a legal
remedy is a function reserved exclusively for
Congress, which can deliberate through hearings,
debates, and legislative votes before setting forth the
law through the text it enacts. Judges lack Congress’s
political accountability and are tasked with applying
the law as enacted. The enforcement of federal laws,
moreover, is the Executive’s prerogative—not that of
private citizens, who might pursue enforcement
actions that clash with the Executive’s goals. By
creating an implied private cause of action to enforce
Section 47(b), the Second Circuit usurped Congress’s
authority, undermined the delicate balance of powers
essential to our constitutional framework, and
4
overstepped its role. There is no justification for this
Court to condone such overreach here.
Sanctioning this breach of the separation of
powers would impose severe real-world costs on the
business community—as evidenced by the history of
litigation in the Second Circuit. Armed with the
Second Circuit’s rule, private litigants currently wield
sweeping power: They can seek rescission of a vast
array of contracts—including advisory agreements,
securities issuances, and even corporate bylaws. The
ICA’s broad scope of coverage—which can capture
companies not structured or operated as funds, such
as development-stage companies raising capital—
only amplifies the issue, as private plaintiffs can
potentially ensnare a wide range of businesses in
costly legal battles. This private-enforcement regime
has injected substantial regulatory uncertainty into
the business landscape, allowing for unpredictable
enforcement actions driven by individual plaintiffs’
whims rather than any consistent enforcement policy.
And given the risks posed by these suits and the
substantial resources necessary to litigate them, even
companies facing patently meritless claims can be
forced to consider settlement.
None of this is justified by the text of the statute
Congress enacted. The Court should adhere to its
precedents, respect Congress’s intent, and hold that
no private right of action under Section 47(b) exists.
Anything less would invite a return to the “bad old
days” that this Court rightly ended. Transcript of
Oral Argument at 45:10-12, CBOCS West, Inc. v.
Humphries, 553 U.S. 442 (2008) (No. 06-1431) (Scalia,
J.) (observing that the Court “inferred th[e] cause of
action [at issue] in the bad old days, when we were
inferring causes of action all over the place”).
5
ARGUMENT
I. No Basis Exists For Inferring A Private Right
Of Action Under Section 47(b)
This Court should not infer a private right of
action under Section 47(b). As Petitioners explain,
Section 47(b)’s text contains no hint of a private right
of action. See Pet. Br. 30-35. That should be the end
of the matter. Moreover, the ICA contains two other
strong indicators that Congress did not intend private
enforcement of Section 47(b): Congress delegated
enforcement of the ICA to the SEC, and Congress
expressly created a private right of action in two
different provisions of the ICA. Id. at 35-37.
This brief highlights an additional, critical flaw in
the Second Circuit’s decision: Creating an implied
private right of action under Section 47(b)
contravenes separation-of-powers principles that this
Court has consistently stressed for more than four
decades. Sanctioning this breach of the separation of
powers here would not only disrupt the constitutional
balance, but also would impose severe costs on
business that Congress did not intend.
A. Respect For The Separation Of Powers
Requires
A
Clear
Indication
Of
Congressional Intent Before Recognizing
A Private Right Of Action
The principles governing the creation, and
implication, of private rights of action boil down to the
proper role of the legislative and judicial branches
under the separation of powers.
“In the mid-20th century, . . . the Court assumed
it to be a proper judicial function to ‘provide such
remedies as are necessary to make effective’ a
statute’s purpose,” and so, “as a routine matter with
6
respect to statutes, the Court would imply causes of
action not explicit in the statutory text itself.” Ziglar
v. Abbasi, 582 U.S. 120, 131-32 (2017). As Justice
Scalia once remarked, those were the “bad old days.”
Transcript of Oral Argument at 45:11, CBOCS West,
Inc. v. Humphries, 553 U.S. 442 (2008) (No. 06-1431).
Starting in 1975, the Court altered its approach.
It “adopted a far more cautious course before finding
implied causes of action,” focusing closely on the
statutory text to ascertain whether Congress
intended to create a private right of action. Ziglar,
582 U.S. at 132-33; see Cort v. Ash, 422 U.S. 66, 68-69
(1975). And by 2001, the Court had emphatically
acknowledged that the practice of liberally
recognizing implied private rights of action was not
only wrong but a relic of an “ancien regime” that the
Court had “abandoned.” Alexander v. Sandoval, 532
U.S. 275, 287 (2001). In the decades since, the Court
“has been very hostile to implied causes of action.”
Johnson v. Interstate Mgmt. Co., 849 F.3d 1093, 1097
(D.C. Cir. 2017) (Kavanaugh, J.); see, e.g., Jesner v.
Arab Bank, PLC, 584 U.S. 241, 264 (2018) (observing
that the “Court’s recent precedents cast doubt on the
authority of courts to extend or create private causes
of action” not expressly created by Congress); Ziglar,
582 U.S. at 133 (similar).
The reason for this shift is clear: The “judicial
creation of a cause of action . . . places great stress on
the separation of powers.” Nestlé USA, Inc. v. Doe,
593 U.S. 628, 636 (2021) (plurality opinion); see also
Cummings v. Premier Rehab Keller, P.L.L.C., 596
U.S. 212, 230 (2022) (Kavanaugh, J., concurring).
Deciding that “persons . . . who engage in certain
conduct will be liable to [others] is, in every
meaningful sense, just like enacting a new law”—a
7
role that belongs exclusively to Congress. Jesner, 584
U.S. at 282 (Gorsuch, J., concurring in part and
concurring in the judgment); see Egbert v. Boule, 596
U.S. 482, 491 (2022) (“At bottom, creating a cause of
action is a legislative endeavor.”).
When courts sanction a new cause of action, they
are “invariably” “‘weigh[ing] and apprais[ing]’” a host
of policy-laden factors, including the potential for
abuse, the predicted impact on the judicial system,
and the existence of alternative enforcement
mechanisms. Elhady v. Unidentified CBP Agents, 18
F.4th 880, 883 (6th Cir. 2021) (Thapar, J.) (citation
omitted), cert. denied, 143 S. Ct. 301 (2022); see
Ziglar, 582 U.S. at 133-36 (discussing these concerns).
These are precisely the types of complex “policy
considerations” that Congress, not the Judiciary, is
equipped to address. Egbert, 596 U.S. at 491; see
Nestlé, 593 U.S. at 637 (plurality opinion) (“[A]ny
judicially created cause of action risks ‘upset[ting] the
careful balance of interests struck by the
lawmakers.’” (alteration in original) (citation
omitted)). For that reason, “when a party seeks to
assert an implied cause of action under a federal
statute, separation-of-powers principles are or should
be central to the analysis.” Ziglar, 582 U.S. at 135.
Just last Term, this Court reinforced these
principles in the analogous context of evaluating
whether a federal statute created rights enforceable
against state and local officials under 42 U.S.C.
§ 1983. In Medina v. Planned Parenthood South
Atlantic, the Court emphasized that its stringent
rules against casually inferring private rights of
action are designed to “‘vindicat[e] the separation of
powers.’” 145 S. Ct. 2219, 2229-30 (2025) (alteration
in original) (citation omitted). It made clear that “the
8
decision whether to let private plaintiffs enforce a
new statutory right poses delicate questions of public
policy.” Id. at 2229. And it underscored that “[t]he
job of resolving how best to weigh [the] competing
costs and benefits” in allowing private enforcement of
a statute “belongs to the people’s elected
representatives, not unelected judges charged with
applying the law as they find it.” Id. at 2229-30.
These principles apply equally to the decision
whether to infer a private right under Section 47(b).
Recognizing an implied private cause of action not
only infringes on Congress’s exclusive role in making
laws but also encroaches on the Executive’s role in
administering them. Private enforcers—who are
unaccountable to the electorate and typically
indifferent to the “social impact of their enforcement
decisions”—sometimes pursue enforcement objectives
that misalign with, or even oppose, broader
regulatory goals. Matthew C. Stephenson, Public
Regulation of Private Enforcement: The Case for
Expanding the Role of Administrative Agencies, 91
Va. L. Rev. 93, 114, 119 (2005); see, e.g., New England
Tel. & Tel. Co. v. Public Utils. Comm’n, 742 F.2d 1, 56 (1st Cir. 1984) (Breyer, J.) (noting that recognizing
an implied private right to enforce FCC regulations
would place the FCC’s “interpretive function squarely
in the hands of private parties and some 700 federal
district judges, instead of in the hands of the
Commission,” which would “deprive the FCC” of its
congressionally conferred “authority in creating,
interpreting, and modifying” a “coherent nationwide
communications policy”), cert. denied, 476 U.S. 1174
(1986). This lack of accountability can lead to
overzealous, inefficient, and misguided enforcement
efforts.
9
A private enforcement regime also allows
plaintiffs’ lawyers “to set policy nationwide” rather
than permitting regulators to shape and balance
regulatory objectives with necessary protections.
U.S. Chamber Institute for Legal Reform, Ill-Suited:
Private Rights of Action and Privacy Claims 14 (July
2019) (Ill-Suited).2 And private enforcement can lead
to “inconsistent and dramatically varied district-bydistrict court rulings,” driven by individual plaintiffs’
aims (and perhaps attempts to secure a lucrative
settlement) rather than an agency regulator’s
comprehensive enforcement agenda.
Id.; see
Stephenson, supra, at 119 (discussing concerns).
Experience shows that agencies are not incapable
of overreach, either.
But, when regulators act
consistently with the law, agency enforcement is more
likely to yield “constructive, consistent decisions” that
protect investors while offering a structured, stable
framework “for companies aiming to align their
practices with existing and developing law.” IllSuited, supra, at 14. Such predictability is vital for
business planning and investment, enabling
companies to focus on growth and innovation rather
than diverting resources to fend off unpredictable
potential private litigation. Layering the threat of
private enforcement actions on top of agency
enforcement trades predictability for the uncertainty
of a constant threat of litigation. That is precisely the
kind of trade-off that Congress would need to consider
before creating a private right of action.
2 https://instituteforlegalreform.com/wp-content/uploads/2020/10/
Ill-Suited_-_Private_RIghts_of_Action_and_Privacy_Claims_
Report.pdf.
10
B. Congress Gave No Indication That It
Intended Section 47(b) To Be Privately
Enforced
The Second Circuit’s decision to recognize an
implied right of action under Section 47(b) flouts
these separation-of-powers principles and grants
private parties a license to sue that Congress did not.
1. Nothing in the text of Section 47(b) expressly
establishes any private right of action. See Pet. Br.
30-35. That should be the end of the matter. As this
Court emphasized in Ziglar, “[if] the statute does not
itself so provide, a private cause of action will not be
created through judicial mandate.” 582 U.S. at 133.
In any event, the structure of the ICA confirms no
private right of action to enforce Section 47(b) exists.
For instance, Congress explicitly empowered the SEC
to enforce “any provision” of the ICA, including
Section 47(b). 15 U.S.C. § 80a-41(d). The SEC can
seek injunctive relief, id., and it can seek monetary
penalties under detailed procedures set out by
Congress, id. § 80a-41(e). These express provisions
underscore that Congress knew perfectly well how to
create rights of action when it wanted to do so—and it
deliberately chose not to do so for Section 47(b).
As this Court emphasized in Sandoval, such
comprehensive provisions for agency enforcement
“contradict a congressional intent to create privately
enforceable rights through [a statutory provision].”
532 U.S. at 290 (emphasis added). After all, “[i]t is
hard to believe that Congress intended” to provide for
an implicit right of action, the contours of which
would be entirely subject to judicial creation, when it
explicitly provided for a comprehensive remedial
scheme based on enforcement by the federal
government. Middlesex Cnty. Sewerage Auth. v.
11
National Sea Clammers Ass’n, 453 U.S. 1, 20 (1981);
see Northwest Airlines, Inc. v. Transport Workers
Union, 451 U.S. 77, 93-94 (1981) (noting that statute’s
comprehensive provisions for enforcement by the
federal government “strongly evidence[] an intent not
to authorize additional remedies”). Recognizing an
implied private right of action in Section 47(b) would
disrupt the careful balance Congress struck,
providing competing enforcement power to private
parties eager to litigate any perceived ICA violation.
On top of that, in Section 36(b), Congress explicitly
created a private right of action to enforce certain
breaches of fiduciary duties. 15 U.S.C. § 80a-35(b).
And in Section 30(h), Congress expressly authorized
private suits for damages against certain defendants
who realize profits from short-swing trading by
insiders with nonpublic information. 15 U.S.C. § 80a29(h). These targeted provisions show that “when
Congress wished to provide” a private right of action
to enforce the ICA, “it knew how to do so and did so
expressly.” Touche Ross & Co. v. Redington, 442 U.S.
560, 572 (1979). Congress did not do so in Section
47(b)—which means that it did not mean to create
such a right. After all, it is highly improbable that
“Congress absentmindedly forgot to mention an
intended private action” when it explicitly and
intentionally provided for enforcement of other ICA
provisions by private persons—and instead provided
for SEC enforcement of these provisions. Cannon v.
University of Chicago, 441 U.S. 677, 742 (1979)
(Powell, J., dissenting).
Moreover, it is unreasonable to think that
Congress intended to leave all the details of an
implicit private action under Section 47(b) to judicial
creation when Congress meticulously defined the
12
scope of the private rights of action in Sections 30(h)
and 36(b). Section 36(b), for instance, allows “a
security holder of [a] registered investment company”
to bring suit against an “investment adviser” for
breach of fiduciary duty, but only under narrowly
defined circumstances spelled out in six separate
subsections. See 15 U.S.C. § 80a-35(b)(1)-(6). Section
36(b) includes detailed rules for these actions, like a
statute of limitations, id. § 80a-35(b)(3), and burden
of proof, id. § 80a-35(b)(1). Given this level of
specificity, it is inconceivable that Congress would
leave the details of a Section 47(b) private action to
judicial discretion.
2. Rather than heed these principles, the Second
Circuit traveled back in time, invoking this Court’s
half-century-old decision in Transamerica Mortgage
Advisors, Inc. (TAMA) v. Lewis, 444 U.S. 11 (1979).
See Oxford Univ. Bank v. Lansuppe Feeder, LLC, 933
F.3d 99, 106-07 (2d Cir. 2019). But TAMA offers no
support for the Second Circuit’s creation of a private
right under Section 47(b).
In TAMA, this Court rejected a private right of
action under Section 206 of the Investment Advisers
Act (IAA), which sets fiduciary standards for
investment advisers, holding that “the mere fact that
the statute was designed to protect advisers’ clients
does not require the implication of a private cause of
action” on their behalf. 444 U.S. at 24. This Court
emphasized that Congress had already “expressly
provided both judicial and administrative means for
enforcing compliance with [Section] 206”: (1) the
federal government could prosecute willful violations
of the Act as criminal offenses; (2) the SEC could bring
civil actions in federal court to enforce compliance
with the Act, including Section 206; and (3) the SEC
13
could impose various administrative sanctions on
violators of the Act, including Section 206. Id. at 20.
“In view of these express provisions for enforcing the
duties imposed by [Section] 206,” TAMA explained, “it
is highly improbable that ‘Congress absentmindedly
forgot to mention an intended private action.’” Id.
(citation omitted).
Those same three considerations apply equally to
Section 47(b): (1) the federal government can
prosecute willful violations of the ICA as criminal
offenses, see 15 U.S.C. § 80a-48; (2) the SEC can bring
civil actions in federal court to enforce “any [ICA]
provision,” including Section 47(b), id. § 80a-41(d);
and (3) the SEC can impose administrative sanctions
on violators of the ICA, including on violators of
Section 47(b), id. § 80a-9(b). Far from validating the
Second Circuit’s position, then, TAMA actually
undermines it—confirming that the ICA’s robust
enforcement mechanisms negate any implication that
Congress intended to create a private right of action
under Section 47(b) without saying so.
The Second Circuit relied on TAMA’s conclusion
that Section 215 of the IAA, which provides that
“‘contracts whose formation or performance would
violate the [IAA] “shall be void . . . as regards the
rights of” the violator,’” implies a private right of
action to seek rescission. Oxford Univ. Bank, 933
F.3d at 106 (alterations in original) (quoting TAMA,
444 U.S. at 16-17). But that portion of TAMA does
not apply here. As TAMA itself recognized, and as
Justice Scalia’s opinion for the Court in Sandoval
reiterated, “where a statute expressly provides a
particular remedy or remedies, a court must be chary
of reading others into it.” TAMA, 444 U.S. at 19; see
Sandoval, 532 U.S. at 290. In TAMA, that logic did
14
not extend to Section 215 because the IAA offered no
other private causes of action. See TAMA, 444 U.S. at
14 (emphasizing that the IAA “nowhere expressly
provides for a private cause of action”). By contrast,
Congress explicitly included two private causes of
action in the ICA. See supra at 11. And those
provisions affirm that “when Congress wished to
provide” a private cause of action in the ICA, “it knew
how to do so and did so expressly.” TAMA, 444 U.S.
at 21 (citation omitted); see also Santomenno v. John
Hancock Life Ins. Co. (U.S.A.), 677 F.3d 178, 186 (3d
Cir.) (distinguishing TAMA on these grounds), cert.
denied, 568 U.S. 978 (2012).
In any event, this portion of TAMA—which tries to
make something out of statutory “silen[ce],” 444 U.S.
at 18—reflects the kind of reasoning that this Court
has since repudiated. See, e.g., Ziglar, 582 U.S. at 133
(emphasizing that courts can “assume that Congress
will be explicit if it intends to create a private cause
of action”). TAMA primarily relied on the fact that
common-law courts had “ordinarily” recognized a
cause of action to rescind void contracts as a matter of
contract law. 444 U.S. at 18. But the Court is “[n]ow
long past ‘the heady days in which [it] assumed
common-law powers to create causes of action.’”
Egbert, 596 U.S. at 491 (citation omitted); see
Sandoval, 532 U.S. at 287 (“Raising up causes of
action where a statute has not created them may be a
proper function for common-law courts, but not for
federal tribunals.” (citation omitted)). And while
TAMA also pointed to cases decided during those
heady days, see 444 U.S. at 19, those cases should
remain relics of that era—not extended here. See,
e.g., Sandoval, 532 U.S. at 287 (refusing to “revert . . .
to the understanding of private causes of action that
15
held sway” in this Court’s earlier cases). Adopting
TAMA’s reasoning here would turn back the clock on
this Court’s precedents.
Unsurprisingly given its vintage, TAMA also
failed to consider Congress’s explicit provision for
agency enforcement of Section 215. Yet Sandoval
clarified that such provisions can be so important that
they “preclude[] a finding of congressional intent to
create a private right of action, even though other
aspects of the statute,” such as “language making the
would-be plaintiff ‘a member of the class for whose
benefit the statute was enacted’” or language
“admittedly creat[ing] substantive private rights,”
point in the opposite direction. 532 U.S. at 290
(citation omitted). Here, Congress specifically tasked
the SEC with enforcing “any provision” of the ICA, 15
U.S.C. § 80a-41(d)—eliminating the need for a private
right of action to enforce Section 47(b).
Despite these differences, the Second Circuit
insisted that Congress’s amendment of Section 47(b)
one year after TAMA, which “distinguished between
unperformed and performed contracts” and confirmed
that “illegality could be raised as a defense to
enforcement,” “strongly implied” an intent for courts
to interpret Section 47(b) like Section 215 of the IAA.
Oxford Univ. Bank, 933 F.3d at 107. This is incorrect.
The amended Section 47(b) language does not even
align with Section 215 of the IAA—the latter states
that “[e]very contract made in violation of any
provision of this subchapter . . . shall be void . . . as
regards the rights of” the violator, 15 U.S.C. § 80b15(b), while the former stipulates that “[a] contract
that is made, or whose performance involves, a
violation of this subchapter . . . is unenforceable,” id.
§ 80a-46(b)
(emphasis
added).
Regardless,
16
speculating about Congress’s intent based on changes
to statutory language that do not alter the operative
statutory language in any relevant respect is the
antithesis of the textual analysis this Court’s
precedents require.
Indeed, this Court has
“repeatedly stated” that courts cannot “replace the
actual [statutory] text with speculation as to
Congress’ intent.” Corner Post, Inc. v. Board of
Governors of Fed. Rsrv. Sys., 603 U.S. 799, 815 (2024)
(citation omitted); see also Barr v. American Ass’n of
Political Consultants, Inc., 591 U.S. 610, 624 (2020)
(plurality opinion) (rejecting a similar argument in
the context of considering whether a statutory
provision was severable). Congress easily could
amend Section 47(b) to provide an express private
right of action—as it did with Section 36(b) in 1970—
but it has not done so. This intentional omission must
be given weight, particularly given Sandoval’s
directive to check for express rights of action before
finding an implied one. See Sandoval, 532 U.S. at
290; see also Touche Ross, 442 U.S. at 572.
The Second Circuit’s strained reasoning cannot be
reconciled with this Court’s longstanding approach to
recognizing private rights of action.
The sole
authority to amend, as well as pass, federal laws rests
with Congress. By recognizing an implied private
right of action under Section 47(b), the Second Circuit
undermined Congress’s exclusive authority to make
law and overstepped its own role.
II. Judicially Creating An Implied Right Of
Action Under Section 47(b) Would Impose
Significant Real-World Costs
Judicial creation of private rights of action is bad
enough. But sanctioning the Second Circuit’s breach
17
of the separation of powers and creating a private
right of action under Section 47(b) would have severe
practical consequences that Congress did not intend.
1. The ICA applies broadly to “investment
compan[ies],” defined to include any company that
(1) “is engaged . . . in the business of investing,
reinvesting, owning, holding, or trading in securities,”
and (2) “owns or proposes to acquire investment
securities having a value exceeding 40 per centum of
the value of such issuer’s total assets.” 15 U.S.C.
§ 80a-3(a)(1)(C). This “broad definition” covers a wide
range of entities—mutual funds, trusts, and hedge
funds, to name a few. United States v. National Ass’n
of Sec. Dealers, Inc., 422 U.S. 694, 697 n.1 (1975).
The ICA’s regulatory regime is stringent. The Act
imposes “onerous requirements and restrictions” on
investment companies, addressing everything from
disclosure and governance to asset safekeeping and
advertising. Jonathan Baird & Eric Stuart, The US
Investment Company Act: A legal minefield for nonUS issuers, PLC Magazine 1-2 (Mar. 2013).3 As one
former SEC Chairman observed, “[n]o issuer of
securities is subject to more detailed regulation than
a mutual fund.” Letter from Ray Garrett, Jr., SEC
Chairman, to the Honorable John Sparkman,
Chairman of the Comm. on Banking, Housing, and
Urban Affairs, United States Senate at v (Nov. 4,
1974),
https://www.sec.gov/divisions/investment/
report-mutual-fund-distribution-22d.pdf.
Section 47(b) provides that any “contract that is
made, or whose performance involves, a violation of
3 https://www.jonesday.com/-/media/files/publications/2013/03/the-
us-investment-company-act-a-legal-minefield-fo/files/ereadattachment/
fileattachment/ereadattachment.pdf.
18
[the Act], or of any rule, regulation or order
thereunder” is unenforceable and potentially subject
to rescission. 15 U.S.C. § 80a-46(b)(1). Congress
tasked the SEC—not private parties—with enforcing
“any provision” of the ICA, and determining whether,
and to what extent, a regulated party is exempt from
its requirements. Id. §§ 80a-41(d), 80a-6(c).
2. Granting private parties the right to enforce
Section 47(b) would upend this regime and
significantly expand the ICA’s reach. Indeed, the
ICA’s “broad and pervasive” regulations make it easy
for plaintiffs to identify purported breaches that can
fuel private suits. Harvey Bines & Steve Thel, The
Varieties of Investment Management Law, 21
Fordham J. Corp. & Fin. L. 71, 91 (2016). And these
private actions could lead to rescission of a broad
spectrum of contracts, causing significant uncertainty
and disruption for the wide swath of companies the
ICA governs.
For instance, Section 47(b) plaintiffs have
previously leveraged purported violations of the ICA
to seek rescission of investment companies’
agreements with advisors, their issuances of
securities, their shareholder rights plans, and even
their corporate bylaws. See, e.g., Laborers’ Loc. 265
Pension Fund v. iShares Tr., No. 13-CV-00046, 2013
WL 4604183, at *6 (M.D. Tenn. Aug. 28, 2013), aff’d,
769 F.3d 399 (6th Cir. 2014), cert. denied, 574 U.S.
1202 (2015); Staniforth v. Total Wealth Mgmt., Inc.,
No. 14-cv-1899, 2023 WL 3805250, at *2 (S.D. Cal.
June 2, 2023); Saba Cap. Master Fund, Ltd. v. ASA
Gold & Precious Metals, LTD., No. 24-CV-690, 2025
WL 951049, at *1 (S.D.N.Y. Mar. 28, 2025); Pet. App.
13a. The rescission of such contracts would destroy
19
continuity and stability and severely disrupt
business.
Making matters worse is the uncertainty
surrounding the ICA’s definition of “investment
company.” 15 U.S.C. § 80a-3(a)(1)(C). That definition
is not only broad but “extremely . . . complicated,” and
it can capture companies that are not structured or
operated as funds, such as development-stage
companies raising capital, holding companies with
minority stakes in other entities, and companies with
complicated financing operations. Baird & Stuart,
supra, at 2. Thus, as practitioners have noted, the
implications of the Second Circuit’s recognition of a
private right of action are “most dramatic” for
unregistered companies that enterprising plaintiffs
might argue should be classified as “investment
compan[ies]” under the ICA. Rich Lincer et al.,
Implied Private Right of Action Under the Investment
Company Act, Harvard Law School Forum on
Corporate Governance (Oct. 7, 2019).4
If a private plaintiff successfully argues that an
unregistered company should have registered with
the SEC, the fallout for that company could be
catastrophic.
Because the ICA “prohibits
[unregistered investment] companies from engaging
in interstate commerce, almost every contract [an
unregistered investment company] enters into
(including any issuances of securities) could be
subject to rescission” under the Second Circuit’s
rule—all without the SEC ever having objected to
that company’s supposed registration failure. Id. As
the Ninth Circuit has cautioned, this expansive
4 https://corpgov.law.harvard.edu/2019/10/07/implied-private-
right-of-action-under-the-investment-company-act/.
20
interpretation of Section 47(b) could empower
plaintiffs to seek rescission of “every . . . contract [an
unregistered company] has entered into” since
inadvertently becoming an “‘investment company’”—
even contracts that the company entered into decades
ago. UFCW Loc. 1500 Pension Fund v. Mayer, 895
F.3d 695, 701 (9th Cir. 2018) (citation omitted).
This threat is not theoretical. Shareholders,
investors, and other contracting parties have already
leveraged the Second Circuit’s implied private right of
action to argue that unregistered companies should
be subject to ICA requirements, seeking rescission of
a wide range of critical contracts. For instance,
shareholders of special purpose acquisition
companies (SPACs) have filed a wave of derivative
actions in the Second Circuit, claiming these entities
are illegally unregistered “investment companies”
and demanding rescission of share purchase
agreements. One shareholder alone has filed at least
three such actions, represented by the same law firm
in each. See Assad v. Pershing Square Tontine
Holdings, Ltd., No. 21-cv-6907 (S.D.N.Y filed Aug. 17,
2021); Assad v. E.Merge Technology Acquisition
Corp., No. 21-cv-7072 (S.D.N.Y. filed Aug. 20, 2021);
Assad v. GO Acquisition Corp., No. 21-cv-7076
(S.D.N.Y. filed Aug. 20, 2021). More of these actions
would undoubtedly follow if this Court sanctions the
Second Circuit’s erroneous holding that Section 47(b)
contains a private right of action. And again, all of
this would happen without Congress’s approval.
This breakdown in the constitutional allocation of
powers also would be problematic for businesses
because it would effectively declare open season on
the SEC’s multi-layered interpretation and
application of the ICA’s substantive provisions,
21
empowering the plaintiffs’ bar to press its own
interpretations while interfering with the SEC’s
discretionary enforcement decisions.
This case
exemplifies the problem. Respondents’ Section 47(b)
recission claims hinge on alleged violations of other
ICA provisions that fall squarely within the
enforcement authority of the SEC—yet the SEC has
chosen not to pursue any enforcement action here.
See Pet. Br. 12-13. As the Solicitor General has
explained, opening a Section 47(b) backdoor in cases
like this risks “interfer[ing] with the SEC’s
discretionary enforcement … decisions”—despite
Congress giving no indication whatsoever of any
intent to deputize private-party plaintiffs to bring
such claims. CVSG Br. 19-20. Recognizing a private
right under Section 47(b) thus would “upset the
balance that Congress struck in the ICA.” Id. at 19.
Recognizing an implied private right under
Section 47(b) also would threaten to nullify specific
ICA exemptions granted by the SEC under its broad
authority, allowing private parties to challenge
companies’ compliance with the terms of those
exemptions even when the SEC itself declines to
pursue
enforcement—undermining
the
very
protections these exemptions were meant to provide.
The SEC has issued conditional exemptions from
the ICA’s stringent requirements to hundreds of
different companies, many containing complex or
vague conditions. See, e.g., Tamar Frankel, The Scope
and Jurisprudence of the Investment Management
Regulation, 83 Wash. U.L.Q. 939, 941-48, 958 (2005)
(discussing exemptions issued by the SEC before
2000, and the common investment restrictions
included in such exemptions). For example, the SEC
has recognized that certain “technology and internet
22
companies” face the problem of becoming inadvertent
“investment companies” and has accordingly crafted
exemptions for such companies, provided they adhere
to limitations on their investments, such as
prohibitions
against
“speculative
investing.”
Christopher P. Healey, Updating the SEC’s
Exemptive Order Process Under the Investment
Company Act of 1940 to Fit the Modern Era, 79 Geo.
Wash. L. Rev. 1535, 1536, 1552 (2011). Creating a
private right of action would open the door to private
lawsuits targeting compliance with those terms, even
when the SEC itself has not seen fit to intervene.
Consider UFCW Local 1500 Pension Fund. There,
a plaintiff attempted to halt a multi-billion-dollar deal
that “the SEC ha[d] not blocked for alleged violations
of an ICA exemption the SEC ha[d] not addressed,
even though the SEC ha[d] been made fully aware of
the facts underlying those alleged violations.” 895
F.3d at 701. The plaintiff claimed that Yahoo!’s
investment in Alibaba.com breached its SEC-issued
ICA exemption, which required that Yahoo! make
investments only “for bona fide business purposes”
and “refrain from investing or trading in [securities]
for short-term speculative purposes.” Id. at 698
(alteration in original). The Ninth Circuit dismissed
the suit for lack of a cause of action, recognizing that
a contrary conclusion could lead to rescission of “every
. . . contract Yahoo! has entered into for the better
part of a decade.” Id. at 701. Such risks are
untenable.
Moreover, as the Ninth Circuit explained, allowing
private litigants to enforce vague and complicated
exemption conditions risks thrusting courts and the
SEC into a “tellingly odd game of chicken.” Id.
“Congress contemplated that companies would
23
contravene the conditions of ICA exemptions and
concluded that the SEC . . . should decide in the first
instance what to do when that happens.” Id. at 700.
But recognizing an implied private right of action
would hijack that authority, putting private citizens
in the place of the SEC. That would subordinate the
SEC—“the body the ICA expressly charges with
considering” whether exemptions should be granted,
revoked, or enforced “in the first instance”—to private
plaintiffs and securities lawyers with an entirely
different set of priorities, and to judicial decisions on
matters Congress entrusted to the agency’s
discretion. Id. at 701. Alternatively, as the SEC can
simply re-exempt a company after a judicial decision,
it would render the court’s “diligent efforts . . .
wasted,” squandering valuable judicial resources. Id.
Neither outcome is desirable.
Meanwhile, if this Court finds an implied private
right under Section 47(b), businesses—and American
productivity—ultimately would pay the price. The
financial toll of defending against lawsuits of this
“unparalleled magnitude” can be overwhelming for
Section 47(b) defendants. Id. Indeed, the costs of
litigating securities-related private actions pose a
particularly heightened threat to companies due to
the extensive discovery and the potentially significant
disruption to the company’s operations that they
implicate. See Stoneridge Inv. Partners, LLC v.
Scientific-Atlanta, Inc., 552 U.S. 148, 163 (2008). This
reality empowers even plaintiffs with “weak claims to
extort settlements,” id., which only fuels more
baseless litigation by “disproportionally benefit[ing]”
plaintiffs’ lawyers, Ill-Suited, supra, at 14; see U.S.
Chamber Institute for Legal Reform, Containing the
Contagion: Proposals to Reform the Broken Securities
24
Class Action System 14-15 (Feb. 2019) (discussing
these concerns, and flagging that private securities
claims “brought in recent years are less meritorious
than in the past”).5
In short, violating the separation of powers has
consequences. Judicially creating a private right of
action under Section 47(b) in this case would thrust
companies into the crosshairs of unpredictable and
costly legal challenges, all the while creating
significant regulatory uncertainty and undermining
the careful balance Congress struck in the ICA. The
Court can, and should, avoid those results by making
clear that it means what it has said. Courts should
get out of the business of creating implied private
rights.
5 https://instituteforlegalreform.com/wp-content/uploads/2020/10/
Securities-Class-Action-Reform-Proposals.pdf.
25
CONCLUSION
The judgment of the court of appeals should be
reversed.
Respectfully submitted,
JANET GALERIA
AUDREY DOS SANTOS
U.S. CHAMBER
LITIGATION CENTER
1615 H Street, NW
Washington, DC 20062
GREGORY G. GARRE
Counsel of Record
BLAKE E. STAFFORD
CHRISTINA R. GAY
LATHAM & WATKINS LLP
555 Eleventh Street, NW
Suite 1000
Washington, DC 20004
(202) 637-2207
gregory.garre@lw.com
Counsel for Amicus Curiae
September 3, 2025
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.