Saba Sues Certain Closed-End Funds Advised by BlackRock, Franklin Resources, Tortoise Capital Advisors, Adams Funds and FS Investments

Saba Capital Management, L.P. (“Saba” or “we”) filed a lawsuit today in the United States District Court for the Southern District of New York against 16 closed-end funds (the “Funds”) advised by BlackRock, Inc. (“BlackRock”), Franklin Resources, Inc. (“Franklin Resources”), Tortoise Capital Advisors, L.L.C. (“Tortoise”), Adams Funds and FS Investments as well as the BlackRock fund 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) and the Tortoise fund trustee (P. Bradley Adams) that have adopted control share acquisition provisions that strip voting rights from shareholders. In addition to their other board assignments and outside responsibilities, each of the BlackRock fund trustees also serves on at least 70 BlackRock fund boards at the same time, despite BlackRock’s guidelines for governance explicitly calling for a four board maximum.

Similar to prior lawsuits Saba brought and won against Eaton Vance and Nuveen, Saba is seeking to invalidate the Funds’ control share provisions as unlawful under the Investment Company Act. Previously, on January 21, 2023, the Suffolk County Superior Court in Massachusetts issued a summary judgment ruling in favor of Saba that invalidated Eaton Vance’s control share provision as a violation of the Investment Company Act. In its ruling, the Massachusetts Court agreed with a 2022 ruling by the United States District Court for the Southern District of New York in a prior lawsuit Saba brought against Nuveen that found the restrictive use of control share bylaws to violate federal law.

Michael D’Angelo, Partner and General Counsel of Saba, commented:

“Despite the clarity of the Investment Company Act, many investment managers continue to pretend as if federal law does not apply to them. By adopting illegal control share provisions, closed-end fund managers, including BlackRock and its fund trustees, Franklin Resources, Tortoise and its fund trustee, Adams Funds and FS Investments, are depriving shareholders of their voting rights in desperate attempts to entrench trustees and investment advisors and avoid accountability for their own governance failures.

Today, Saba has filed litigation in the United States District Court for the Southern District of New York in an effort to put an end to the practice of vote stripping, which we believe has contributed to significant losses suffered by shareholders across these underperforming funds. We are seeking to hold these managers accountable in court, just as we have successfully done with both Eaton Vance and Nuveen.

The Investment Company Act is unambiguous in stating that ‘every share of stock hereafter issued by a registered management company…shall be a voting stock and have equal voting rights with every other outstanding voting stock.’ We are committed to taking all necessary actions to hold these investment managers accountable in order to protect closed-end fund shareholders and restore their fundamental, equal voting rights.”

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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