Oral Argument Re-Listen: FS Credit v. Saba | Fund Wins Fiduciary Fairness Fight

FS Credit Opportunities Corp. v. Saba Capital Master Fund, Ltd. | Case No. 24-345 | Docket: Here | Argued: 12/10/2025 | Decided: 06/11/2026 **Overview:** The Investment Company Act case addresses whether Section 47(b) grants private parties the right to sue for contract rescission, testing the limits of implied private rights of action against a comprehensive SEC enforcement scheme. **Oral Advocates:** - **For Petitioner** **(FS Credit) and Respondents (BlackRock):** Shay Dvoretzky, Washington, D.C. - **For United States as Amicus Curiae in Support of FS Credit and BlackRock:** Max E. Schulman, Assistant to the Solicitor General, Department of Justice - **For Respondent (Saba):** Paul D. Clement, Alexandria, VA **Question Presented:** Whether Section 47(b) of the Investment Company Act impliedly empowers private parties to sue for contract rescission. **Posture:** District Court granted Saba summary judgment; Second Circuit summarily affirmed; Supreme Court reversed. **Main Arguments:** - Petitioner (the Funds): - (1) Section 47(b) directs courts on remedy application, not individuals on rights to sue — it lacks rights-creating language aimed at a particular class under *Sandoval*; - (2) The ICA's comprehensive SEC enforcement scheme and two express private rights of action elsewhere in the statute foreclose implied private enforcement; - (3) Congress's 1980 deletion of "shall be void" — the precise textual basis *TAMA* relied on — signals changed meaning and eliminates the implied right. - Respondent (Saba): - (1) Congress inserted "rescission" and "any party" into Section 47(b) in 1980, language presupposing an affirmative private right for both contract parties; - (2) *TAMA*'s unanimous rescission holding survives the 1980 amendments, which refined rather than eliminated the private right; - (3) House and Senate Committee Reports expressly called for courts to imply private rights of action under the amended ICA. **Holding:** Section 47(b) of the ICA does not impliedly empower private parties to sue for rescission of contracts that allegedly violate the Act. **Voting Breakdown:** 6-3. Justice Barrett wrote the majority opinion 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, with Justice Kagan joining Parts I and II. Reversed and remanded. **Opinion:** Here **Majority Reasoning:** - (1) Section 47(b)'s "a court may not deny rescission" language directs courts on remedy — it lacks rights-creating language aimed at a particular class of persons under *Sandoval*; - (2) The ICA's comprehensive SEC enforcement scheme and two express private rights of action elsewhere in the statute foreclose implied private enforcement; - (3) Congress's 1980 deletion of "shall be void" — the *TAMA* linchpin — signals changed meaning and removes the textual foundation for a private right. **Separate Opinions:** - Justice Kagan (dissenting alone): Agrees with Jackson's text-and-structure analysis that Section 47(b) supports a private right; declines to rely on legislative history, finding the provision not sufficiently ambiguous to require resort to committee reports. - Justice Jackson (dissenting, joined by Justice Sotomayor; Justice Kagan joins Parts I and II): Congress inserted "rescission" and "any party" into the 1980 amendments to preserve *TAMA*'s rescission right; post-performance context makes affirmative suit the only practical remedy; Committee Reports expressly called for continued implied rights under the amended ICA. **Implications:** - (1) Activist investors lose the federal right to challenge closed-end fund governance under Section 47(b); the SEC remains the exclusive enforcer; - (2) Closed-end funds gain protection from private ICA rescission suits; state control-share adoption receives implicit judicial validation; - (3) The Court extends textualist limits on implied private rights of action, tightening *Sandoval*'s framework further into securities law. **The Fine Print:** - Section 47(b)(2), 15 U.S.C. §80a-46(b)(2): "a court may not deny rescission at the instance of any party unless such court finds that under the circumstances the denial of rescission would produce a more equitable result than its grant and would not be inconsistent with the purposes of this subchapter." - Section 18(i), 15 U.S.C. §80a-18(i): "every share of stock hereafter issued by a registered management company . . . shall be a voting stock and have equal voting rights with every other outstanding voting stock." **Primary Cases:** - *Alexander v. Sandoval* (2001): Courts infer implied private rights of action only where a statute uses rights-creating language aimed at a particular class of persons; language directing courts or agencies falls short. - *Transamerica Mortgage Advisors, Inc. v. Lewis* (1979): The Investment Advisers Act's "shall be void" language created an implied private right of action for rescission; all nine justices agreed on that point. **Timestamps:** \[00:00:00] Oral Argument Preview \[00:01:23] Oral Argument Begins \[00:01:36] Petitioner Opening Statement \[00:03:40] Petitioner Free for All Questions \[00:19:29] Petitioner Round Robin Questions \[00:30:53] United States as Amicus Curiae Opening Statement \[00:32:17] United States Free for All Questions \[00:42:11] United States Round Robin Questions \[00:46:27] Respondent Opening Statement \[00:48:55] Respondent Free for All Questions \[01:16:48] Respondent Round Robin Questions \[01:16:58] Petitioner Rebuttal