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Abstract: 

This article examines the current state of predatory closed-end fund activism in the United States, noting a decline in activist activity in 2025 compared to the heightened levels observed in 2023 and 2024. Despite this relative decrease, closed-end funds continue to face significant disruption and costly litigation initiated by activist investors holding shares in approximately 40% of listed closed-end funds as of June 2025. This article analyzes several recent decisions involving defensive measures, majority-of-outstanding-shares voting standards in contested board elections, director “holdover” provisions, and shareholder rights plans (i.e., poison pills), employed by closed-end funds. Of particular significance, the article discusses the pending Supreme Court case FS Credit Opportunities Corp. v. Saba Capital Master Fund, Ltd., which will resolve a circuit split on whether Section 47(b) of the Investment Company Act of 1940 creates an implied private right of action for shareholders. The article concludes that while recent court decisions have provided some clarity on defensive measures available to closed-end funds, the legal landscape remains uncertain, and the Supreme Court’s forthcoming ruling — expected in the first half of 2026 — could have substantial implications for closed-end fund litigation and governance.

Keywords: Saba Capital Master Fund, Ltd.; Proxy Voting Contests

Affiliations:  1: Ropes & Gray LLP; 2: Ropes & Gray LLP.