US Urges Justices Review Right to Sue Over Corporate Resolutions

Activist investors’ ability to file private lawsuits to repeal corporate resolutions under a provision of the 1940 Investment Company Act goes against Congress’ intent, threatens regulator discretion, and could harm investment funds, the federal government told the US Supreme Court.

The Justice Department delivered that message in a friend of the court brief filed Thursday urging the justices to review a US Court of Appeals for the Second Circuit ruling recognizing such a right last year.

The Second Circuit’s “erroneous recognition” of an implied right under the ICA’s Section 47(b) has allowed Saba Capital Management LP and similar groups “to ...