Overview
- The Court held on June 11 that Section 47(b) does not create an implied private right to sue for rescission, reversing the Second Circuit and resolving a split among federal appeals courts.
- Justice Amy Coney Barrett wrote the 6–3 majority opinion, which explained that Section 47(b) governs a court’s remedial power to grant rescission rather than supplying an independent cause of action.
- The decision leaves undecided whether the challenged Maryland control‑share bylaws violate Section 18(i) of the 1940 Act and does not prevent the SEC from investigating or enforcing the statute.
- Practically, closed‑end funds and their service providers face lower risk that contracts or bylaws will be voided through private Section 47(b) suits, while activists must rely on fiduciary‑duty claims, state‑law causes of action, or SEC enforcement.
- The ruling reinforces that Congress and the SEC are the primary enforcers of the 1940 Act and likely shifts focus to SEC examinations, potential rulemaking, and any congressional response as the next venues for resolving governance disputes.