Sidley Secures Supreme Court Victory in Investment Company Act Appeal

Sidley was a part of a team that secured a significant victory on behalf of the Royce Global Trust, when the Supreme Court ruled that there is not an implied private right of action under the Investment Company Act of 1940 (ICA). Saba Capital, a hedge fund, had initially brought litigation against Royce and several other investment companies alleging that a corporate by-law provision violated the ICA, which regulates investment companies. After the Second Circuit ruled against our client, Royce and the other companies petitioned for certiorari, and, after both the Solicitor General and the Securities and Exchange Commission weighed in in favor of Royce, the petition was granted.

In FS Credit Opportunities Corp. v. Saba Capital Master Fund, Ltd., the Court sided 6-3 with our client and the other petitioners, holding that private parties cannot bring suits against entities regulated by the ICA except under the express terms of the statute, resolving a circuit split on the issue. The ruling is important because it affirms the framework intended by Congress under which the Securities and Exchange Commission, rather than opportunistic plaintiffs, is primarily responsible for enforcement of compliance with the ICA.

Sidley lawyers Eamon Joyce, Alex Kaplan, Nathan Greene, Charlotte Newell, James Horner, Zachary Payne, and Elana Somers represented Royce.