MoKa Submits Amicus Brief In Second Circuit Control Share Dispute

Morris Kandinov LLP is representing Bulldog Investors in connection with an amicus curiae brief submitted in an appeal pending before the U.S. Court of Appeals for the Second Circuit. In the case, five closed-end funds managed by the same board of trustees and investment adviser implemented control-share measures in order to artificially restrict an individual shareholder’s voting power to 10% of the funds’ outstanding shares. The plaintiff in the action alleged that the defensive mechanisms violate Section 18(i) of the Investment Company Act of 1940 (“ICA”), and the trial court previously agreed. Bulldog’s amicus brief argues on appeal that plaintiff’s position is correct, that the ICA was intended to prevent the very type of abusive practices at issue, and that control share measures are harmful because they prevent investors from holding fund management accountable. Indeed, as early as 1940, the SEC recognized that regulations must ensure that an investor has a fair “opportunity to supplant the management of his investment company when the conduct of those representatives no longer meets with his approval.” Arguments to the contrary have been largely invented by investment advisers in connection with litigation so as to justify their defensive measures.

By MoKa

The case is Saba Capital CEF Opportunities 1, LTD. v. Nuveen Floating Rate Income Fund, No. 22-407 (2d Cir.).

For additional information, please contact Aaron Morris at