U.S. District Court for the Southern District of New York Rules That Certain Closed-End Funds, Including Funds Advised by BlackRock, Violated the Investment Company Act of 1940
07 Dicembre 2023 - 2:00PM
Business Wire
BlackRock Illegally Stripped Votes at its
Closed-End Funds’ 2023 Annual Meetings
Saba Capital Management, L.P. (“Saba” or “we”) today commented
on the outcome of the lawsuit brought in the United States District
Court for the Southern District of New York (the “Court”) against
16 closed-end funds (the “Funds”) including those managed by
BlackRock, Inc. (“BlackRock”) and its Trustees (R. Glenn Hubbard,
W. Carl Kester, Cynthia L. Egan, Frank J. Fabozzi, Lorenzo A.
Flores, Stayce D. Harris, J. Phillip Holloman, Catherine A. Lynch,
Robert Fairbairn and John M. Perlowski).
Saba filed its lawsuit in the Court on June 29, 2023 after the
BlackRock trustees disclosed they would strip shareholders’ votes,
in violation of the Investment Company Act of 1940 (the “ICA”), at
their 2023 Annual Meeting. Despite the Funds filing various motions
to dismiss the lawsuit, the Court ruled in favor of Saba, finding
that the actions of the BlackRock Fund and its trustees violated
federal law.
Boaz Weinstein, Founder and Chief Investment Officer of Saba,
commented:
“By hook or by crook, BlackRock and its trustees were determined
to avoid being held accountable for the billions of dollars lost
for investors. We are pleased to have brought this lawsuit for the
benefit of all investors in closed-end funds managed by BlackRock
to put an end to the practice of robbing shareholders of their
right to vote all of their shares.
While ISS has previously highlighted BlackRock’s ‘abusive’
governance practices, this goes far beyond bad governance. By
illegally stripping votes in an attempt to rig the election in
their favor, BlackRock trustees broke the law and deprived
shareholders of their right to a fair and democratic election.
BlackRock did this despite the fact that two courts already made
clear that stripping fund investors of their voting rights is
illegal.”
Saba has previously brought and won lawsuits against Eaton Vance
and Nuveen regarding illegal vote stripping. Just last week, the
U.S. Court of Appeals for the Second Circuit upheld that certain
Nuveen-advised closed-end funds also violated the ICA after Saba
sued Nuveen and the trustees in the Court.
The Court found the following funds adopted control share
provisions in violation of the ICA: BlackRock Municipal Income Fund
(NYSE: MUI), BlackRock ESG Capital Allocation Term Trust (NYSE:
ECAT), Adams Diversified Equity Fund (NYSE: ADX), Adams Natural
Resources Fund (NYSE: PEO), Tortoise Midstream Energy Fund (NYSE:
NTG), Tortoise Energy Independence Fund (NYSE: NDP), Tortoise
Pipeline & Energy Fund (NYSE: TTP), Tortoise Energy
Infrastructure Corp. (NYSE: TYG), Ecofin Sustainable and Social
Impact Term Fund (NYSE: TEAF), Royce Global Value Trust (NYSE: RGT)
and FS Credit Opportunities Corp. (NYSE: FSCO). Royce Global Value
Trust is managed by Royce Investment Partners, an affiliate of
Franklin Templeton.
***
About Saba Capital
Saba Capital Management, L.P. is a global alternative asset
management firm that seeks to deliver superior risk-adjusted
returns for a diverse group of clients. Founded in 2009 by Boaz
Weinstein, Saba is a pioneer of credit relative value strategies
and capital structure arbitrage. Saba is headquartered in New York
City. Learn more at www.sabacapital.com.
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version on businesswire.com: https://www.businesswire.com/news/home/20231207608236/en/
Longacre Square Partners Greg Marose / Kate Sylvester,
646-386-0091 gmarose@longacresquare.com /
ksylvester@longacresquare.com
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