Supreme Court Shields Funds From Some Lawsuits by Investors (2)

The US Supreme Court shielded funds from some investor lawsuits, ruling that an 86-year-old federal statute doesn’t authorize shareholders to sue over bylaws and management decisions.

Voting 6-3 along ideological lines, the justices on Thursday blocked activist investors from suing 11 closed-end funds, including some affiliated with FS Credit Opportunities Corp. and BlackRock Inc. The investors, led by hedge fund manager Boaz Weinstein’s Saba Capital Master Fund, were seeking more control over the funds.

The high court said the 1940 Investment Company Act doesn’t authorize private lawsuits for most violations, leaving enforcement to the US Securities and Exchange ...