Skadden has secured a significant victory in the Supreme Court on behalf of FS Credit Opportunities Corp. (FS). In a notable win for the registered fund industry, the Court held that Section 47(b) of the Investment Company Act of 1940 (ICA) does not have an implied private right of action for private litigants to sue for certain violations of the ICA.
The opinion, which tracks Skadden’s briefing and partner Shay Dvoretzky’s oral argument before the Court, reverses the Second Circuit ruling in the case, in which Saba Capital Master Fund, Ltd. claimed that FS and other closed-end funds’ governance structures violated the ICA and sought to rescind the funds’ governing bylaws. Skadden filed a petition for certiorari, which the Supreme Court granted in June 2025 to resolve a split between the Second Circuit, which recognized a private right of action, and the Third and Ninth Circuits, which did not.
By rejecting a private right of action, the Court reinforced the SEC’s primary enforcement role and maintained greater regulatory certainty for funds.
This appearance marked Mr. Dvoretzky’s 22nd (of 23) arguments before the Supreme Court. The Skadden team also included Parker Rider-Longmaid, Scott Musoff and Eben Colby.