In FS Credit Opportunities Corp. v. Saba Capital Master Fund, Ltd., issued on June 11, 2026, the Supreme Court declined to imply a private right of action under Section 47(b) of the Investment Company Act (the “ICA”).[1] The Court reemphasized the importance of statutory text, structure, and history when discerning whether a statute implies a private right of action.
Background
Saba arose out of a dispute between an “open-end” and a “closed-end” mutual fund. Open-end funds sometimes seek to purchase large stakes in low-performing closed-end funds to change their behavior. Closed-end funds often incorporate in jurisdictions—in this case, Maryland––with control share acquisition statutes that provide protection against sudden takeovers by activist investors. Saba, an open-end fund, sued the respondents, multiple closed-end funds, claiming that respondents’ invocation of Maryland’s Control Share Acquisition Act violated Section 47(b) of the ICA.
Section 47(b) does not expressly provide a private right of action, but states that “a court may not deny rescission” of contracts in violation of the ICA “at the instance of any party” except in certain circumstances. Relying on prior circuit precedent, the Second Circuit concluded that Section 47(b) implied a private right of action.[2] This confirmed a split with the Third Circuit, which had previously held that Congress created no private right of action to enforce Section 47(b).[3] The Supreme Court granted certiorari to resolve the split.
The Opinion
In a 6-3 opinion written by Justice Barrett (joined by Chief Justice Roberts and Justices Thomas, Alito, Gorsuch, and Kavanaugh), the Supreme Court held that Section 47(b) does not provide a private right of action. The Court emphasized its textual approach to discerning whether a statute implies a private right of action.
First, the Court determined that Section 47(b)’s text indicates Congress did not establish a private right of action, express or implied. Section 47(b) tells courts that they “may not deny rescission at the instance of any party.” This language “presupposes that parties are already before the court and directs the court’s use of its remedial authority.” Indeed, the provision expands the reach of common-law rescission to contracts that have been performed, “overriding the common-law default” and “unlock[ing] remedies that would otherwise be unavailable.” The statute “says not a word about individual rights,” and a directive regarding a court’s remedial powers does not imply a private right of action.
Second, the Court determined that the broader structure of the ICA confirmed the absence of a private right of action. “[T]he Securities and Exchange Commission bears primary responsibility for ensuring compliance with the ICA,” and “Congress’ decision to create a comprehensive agency enforcement scheme supports the conclusion that private parties generally cannot enforce the ICA.” The ICA “also expressly authorizes two private rights of action,” casting doubt that Congress also implied a right of action under Section 47(b). Put differently, “when Congress wished to provide a private . . . remedy” to enforce the ICA, “it knew how to do so and did so expressly.”
Third, the Court reasoned that amendments to Section 47(b) undercut Saba’s position that a private right of action could be implied from the statutory text. Saba relied on the Investment Advisers Act, which declared that contracts made in violation of that statute “shall be void.” The Supreme Court earlier concluded that the “shall be void” language in the Investment Advisers Act implied a private right of action to void those contracts. See Transamerica Mortgage Advisors, Inc. v. Lewis, 444 U.S. 11 (1979). While Section 47(b) at one point contained “shall be void” language, it no longer does. Congress—just after Transamerica—deleted the “shall be void” language in Section 47(b) and instead stated violative contracts are “unenforceable by either party” and “a court may not deny rescission at the instance of any party” of such a contract.
Fourth, the Court declined to rely on pronouncements about private rights of action in the ICA’s legislative history. The Court characterized the dissent’s belief that legislative history reflects the unified view of legislators on a statute’s application as a “fictional premise.” If Congress had expressed a “wish” for an implied private right in Section 47(b), the Court questioned why Congress did not also “make [the wish] express.” The Court thus reaffirmed that statutory “interpretation must be driven by ‘analysis of the statute’ rather than ‘psychoanalysis of Congress.’”[4]
Justice Jackson, joined by Justice Sotomayor, dissented, contending that statutory text, structure, and history all support recognition of a private right of action under Section 47(b). The dissent also relied on legislative history as reflected in reports of the House Committee on Interstate and Foreign Commerce and the Senate Committee on Banking, Housing, and Urban Affairs. Justice Kagan joined Justice Jackson’s dissent, but declined to join the portion drawing upon the legislative history.
Takeaways
The Supreme Court looks to statutory text, structure, and history to discern private rights of action. Saba confirms the Court’s methodology for discerning implied private rights of action in the securities law context, and joins other recent decisions—across diverse areas of law such as Medicaid, constitutional torts, extraterritorial torts, and discrimination law––declining to imply private rights of action. Saba also reflects the Court’s continued reticence against implying private rights of action, or expanding previously recognized rights, in securities cases. [5]
When litigating for or against an implied private right of action, parties should rely on statutory text, structure, and history rather than legislative history. Saba’s analysis expresses the importance of statutory text, structure, and history when the Supreme Court interprets statutes. Both the six-justice majority and the three dissenters carefully analyzed Section 47(b)’s language, its place in the wider statutory structure, and the statute’s history—when and how it was enacted, when and how Congress revised the statute, and how surrounding context such as judicial opinions influenced any revisions. Unlike the dissent, however, the six-justice majority (plus Justice Kagan) gave little consideration to legislative history—statements and pronouncements by individual members of Congress and congressional committees at the time of enactment. Going forward, the strongest arguments for or against an implied private right of action will sound in text, structure, and statutory history rather than legislative history. As Justice Kagan famously stated a decade ago, “we’re all textualists now.”[6]
Closed-end funds now have greater protection from lawsuits by activist investors. Following Saba, activist investors like open-end funds can no longer sue under Section 47(b) to pressure closed-end funds to change their investment strategy. Open-end funds may pursue other causes of action under the ICA or state law, but closed-end funds have succeeded in closing off a potential avenue for litigation against them.
[1] FS Credit Opportunities Corp. v. Saba Cap. Master Fund, Ltd., No. 24-345 (U.S. June 11, 2026).
[2] Oxford Univ. Bank v. Lansuppe Feeder, LLC, 933 F.3d 99 (2d Cir. 2019).
[3] Santomenno ex rel. John Hancock Tr. v. John Hancock Life Ins. Co. (USA), 677 F.3d 178 (3d Cir. 2012).
[4] United States v. Pub. Util. Comm’n of Cal., 345 U.S. 295, 319 (1953) (Jackson, J., concurring).
[5] Stoneridge Inv. Partners, LLC v. Sci.-Atlanta, 552 U.S. 148 (2008) (declining to expand Section 10(b) implied right of action against third parties who partnered with a company that mislead investors); Central Bank of Denver, N.A. v. First Interstate Bank of Denver, N.A., 511 U.S. 164 (1994) (finding no implied right of action for aiding and abetting liability under Section 10(b) of the Securities Exchange Act of 1934); Va. Bankshares, Inc. v. Sandberg, 501 U.S. 1083 (1991) (declining to expand implied right under Section 14(a) of the Securities Exchange Act of 1934 to minority shareholders whose votes are not required to authorize corporate action subject to the proxy solicitation); Touche Ross & Co. v. Redington, 442 U.S. 560 (1979) (finding no implied right of action under Section 17(a) of the Securities Exchange Act of 1934 against accountants who provide misstatements in financial reports filed with regulatory authorities).
[6] Harvard Law School, The 2015 Scalia Lecture Series: A Dialogue with Justice Elena Kagan on the Reading of Statutes, YouTube, at 08:29 (Nov. 25, 2015), https://www.youtube.com/watch?v=dpEtszFT0Tg&feature=youtu.be.
