On June 11, 2026, the U.S. Supreme Court decided FS Credit Opportunities Corp. v. Saba Capital Master Fund, Ltd., No. 24-345, in a divided opinion, holding that Section 47(b) of the Investment Company Act (ICA) does not create an implied private right of action.
Section 47(b) of the ICA provides that “a court may not deny rescission” of contracts that violate the ICA “at the instance of any party” unless doing so would be consistent with equity and the Act’s goals. The ICA designates the Securities and Exchange Commission (SEC) as its primary enforcer and expressly permits private enforcement of only two provisions.
The petitioners (the Funds) are investment companies that manage closed-end mutual funds. The Funds adopted control-share provisions that limited the voting power of large shareholders. Respondent Saba Capital sued the petitioners, alleging that those provisions violated the ICA’s requirement that “every share of stock . . . shall be a voting stock and have equal voting rights with every other outstanding stock,” and sought rescission under Section 47(b). The District Court held that Section 47(b) creates an implied private right of action and granted Saba summary judgment; the Second Circuit summarily affirmed.
The Supreme Court reversed. The Court began with the principle that “Congress, not the Judiciary, decides who may enforce the law.” Although courts once inferred private causes of action from statutory text, the Court has rejected the practice of “fashioning rights of action” because judicially created causes of action are difficult to reconcile with the Constitution’s separation of legislative and judicial powers. To create a private right of action, a statute generally must contain “rights-creating language” that protects a particular class.
Applying those principles, the Court concluded that Section 47(b) does not create a private cause of action. The provision is directed to courts rather than to a particular class of protected persons. Its wording “presupposes that parties are already before the court and directs the court’s use of its remedial authority”; it says nothing about individual rights. The Court further explained that rescission is a remedy, not a cause of action. Section 47(b) governs the availability of that remedy by directing courts not to deny rescission in specified circumstances. By overriding certain common-law limitations on contract rescission, the provision “unlocks remedies that would otherwise be unavailable” but does not itself create a cause of action.
Finally, the Court explained that the existence of an express remedial scheme elsewhere in a statute may indicate that Congress did not intend to authorize additional implied remedies. The ICA contains two express private rights of action and grants the SEC comprehensive enforcement authority. Those features reinforced the conclusion that Congress did not intend to authorize private suits under Section 47(b). When Congress wished to create a private remedy to enforce the ICA, it did so expressly.
Justice Barrett delivered the opinion of the Court, joined by Chief Justice Roberts and Justices Thomas, Alito, Gorsuch, and Kavanaugh. Justice Kagan filed a dissenting opinion. Justice Jackson filed a dissenting opinion, joined by Justice Sotomayor and, as to Parts I and II, by Justice Kagan.
