U.S. Supreme Court Rejects Implied Private Right of Action for Rescission Under Investment Company Act

The U.S. Supreme Court, in a 6-3 decision, ruled that Section 47(b) of the Investment Company Act (ICA) does not implicitly empower private parties to sue for rescission of contracts that allegedly violate the ICA. This decision resolves a circuit split, reverses the U.S. Court of Appeals for the Second Circuit, and significantly curtails the ability of activist investors to challenge closed-end fund governance structures through private action, reinforcing the SEC's role as the primary enforcer of ICA compliance.