On June 11, 2026, the U.S. Supreme Court ruled that Section 47(b) of the Investment Company Act of 1940 (ICA) does not create an implied private right of action for rescission. Reversing the Second Circuit’s decision, the Court held that §47(b) addresses remedies available to a court in a proper case; it does not authorize private parties to sue in the first instance.1 The decision narrows one federal litigation path that activists and other private plaintiffs sought to use to challenge fund governance measures. It also underscores that the real exposure may now be elsewhere: SEC enforcement, expressly authorized private claims such as §36(b), state-law fiduciary and contract theories, and careful board process and disclosure around governance measures that bear on voting rights and shareholder activism.
Supreme Court Limits Private Rescission Claims Under the Investment Company Act
