Skadden, as co-counsel, won a bench trial on behalf of certain Eaton Vance closed-end funds and their board of trustees on all remaining counts in a case against hedge fund Saba Capital Master Fund, Ltd. Saba asserted that a 2020 bylaw amendment concerning contested trustee elections violated both the Investment Company Act of 1940 (40 Act) and the funds’ governing documents. The amended bylaw requires that in a contested election, a candidate must receive the affirmative vote of 50% of the fund’s outstanding shares to win. Saba claimed that this standard was “impossible in practice” to achieve, and deprived shareholders of their voting rights in trustee elections. After hearing evidence, Judge Debra Squires-Lee of the Business Litigation Session of the Massachusetts Superior Court held that the bylaw did not violate either the 40 Act or the funds’ governing documents, and was consistent with protecting the interests of long-term shareholders from Saba’s short-term arbitrage strategy. Eben Colby led the Skadden team.
by Rohin Pujari
