On June 11, 2026, the U.S. Supreme Court issued a ruling that has broad implications for PE sponsors and the risk profiles of the funds they manage. The case addressed the issue of whether Section 47(b) of the Investment Company Act of 1940 (Investment Company Act) – which provides that contracts that violate the Investment Company Act are not enforceable and can be rescinded – includes an implied private right of action. The Court agreed to hear the case to resolve a circuit split between the U.S. Courts of Appeal for the Second, Third and Ninth Circuits, respectively. Ultimately, the Court held that Section 47(b) does not create an implied private right of action. The ruling is particularly notable for the private funds industry as it eliminates the risk of fund investors seizing on an implied private right of action under Section 47(b) to bring litigation to rescind their existing contracts with fund managers. In a guest article, Jenner & Block partners Charles D. Riely, Todd C. Toral and Martin C. Glass summarize the Court’s decision and detail some of its implications for private fund managers. See “Contractual Provisions That Matter in Litigation Between a Fund Manager and an Investor” (Oct. 2, 2014).