shareholders

FS Credit Opportunities Corp. v. Saba Capital Master Fund, Ltd.

Issues

Does Section 47(b) of the Investment Company Act create a federal right of action for private entities?

This case asks the Court to determine whether Congress created an implied private right of action under the Investment Company Act (“ICA”) of 1940, by stating in Section 47(b) that a court “may not deny rescission at the instance of any party.” Petitioners argue that Congress did not intend to grant private parties the right to sue, as Congress would have explicitly stated a private right in the ICA had they intended to include one. Additionally, Petitioners argue that the words of the statute themselves do not imply a private right of action. Respondents contend that Congress’s use of “rights-creating language” in the statute demonstrated its intent to create a private right of action and assert that the plain text of the statute does in fact explicitly state this right. This case touches on important questions regarding the separation of powers between federal branches of government and the impact of ICA enforcement on the market.

Questions as Framed for the Court by the Parties

Whether Section 47(b) of the Investment Company Act creates an implied private right of action.

In 1940, Congress enacted the Investment Company Act (“ICA”), along with a number of other pieces of legislation, in response to the stock market crash of 1929 and subsequent Great Depression, in order to regulate securities and prevent a similar economic crisis. Petition f

Acknowledgments

The authors would like to thank Professor Robert C. Hockett for his insights into this case.

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