FS Credit Opportunities v. Saba Capital Master Fund

The Court decided that Section 47(b) of the Investment Company Act impliedly allows private parties to seek rescission (undoing a transaction). The dispute involved closed-end funds and an investor that bought stakes in underperforming funds.

Justice Barrett wrote the 6–3 opinion, joined by Chief Justice Roberts and Justices Thomas, Alito, Gorsuch, and Kavanaugh; Justices Kagan, Sotomayor, and Jackson dissented.

Majority

Barrett

Roberts

Thomas

Alito

Gorsuch

Kavanaugh

Dissent

Kagan

Sotomayor

Jackson

Private parties may seek to undo transactions under Section 47(b), not just rely on government enforcement. For example, an investor challenging a transaction involving an investment company may now bring a rescission claim.

Lower courts must apply the Court's answer when parties bring Section 47(b) rescission claims. Investment companies, funds, and investors will need to assess how the decision affects challenged transactions and pending lawsuits.

The Court decided that Section 47(b) impliedly permits private parties to seek rescission, meaning they can ask a court to undo a transaction.

Investment companies, closed-end funds, investors, and parties to disputed transactions may be affected. Private investors can now pursue Section 47(b) rescission claims.

Lower courts will apply the decision in future and pending Section 47(b) cases. Affected funds and investors may reassess disputed transactions and litigation.