United States Court of Appeals For the Second Circuit

August Term 2022 Argued: April 25, 2023 Decided: September 7, 2023 No. 22-1912

NEXPOINT DIVERSIFIED REAL ESTATE TRUST, Plaintiff-Appellant, * v. ACIS CAPITAL MANAGEMENT, L.P., JOSHUA N. TERRY, BRIGADE CAPITAL MANAGEMENT, LP, Defendants-Appellees,

HIGHLAND CLO FUNDING, LTD., Intervenor-Defendant-Appellee,

and U.S. BANK, N.A., Defendant.

Appeal from the United States District Court for the Southern District of New York No. 21CV04384, Gregory H. Woods, Judge.

Before: CABRANES, BIANCO, and MERRIAM, Circuit Judges.

Plaintiff-appellant NexPoint Diversified Real Estate Trust (“NexPoint”), a noteholder in a collateralized loan obligation, appeals from the dismissal by the District Court (Gregory H. Woods, J.) of its claim under §215(b) of the Investment Advisers Act of 1940 (“IAA”), 15 U.S.C. §80b-15(b). Section 215(b) provides a cause of action for * The Clerk of Court is respectfully directed to amend the official case caption as set forth above. rescission of contracts (1) that were made in violation of the IAA or (2) the performance of which involves the violation of the IAA. We hold that, under §215(b), a contract’s performance involves the violation of the IAA only if performing a contractual duty requires conduct prohibited by the IAA. No such unlawful conduct is required by the contracts NexPoint seeks to rescind, and therefore we AFFIRM the judgment of the District Court. AFFIRMED. MAZIN A. SBAITI (Griffin S. Rubin, on the brief), Sbaiti & Company PLLC, Dallas, TX, for Plaintiff- Appellant NexPoint Diversified Real Estate Trust.

BLAIR A. ADAMS (Jonathan E. Pickhardt, William B. Adams, on the brief), Quinn Emanuel Urquhart & Sullivan, LLP, New York, NY, for Defendants- Appellees Acis Capital Management, L.P. and Joshua N. Terry.

SAMIR DEGER-SEN (Jason C. Hegt, Alexis K. Godfrey, on the brief), Latham & Watkins LLP, New York, NY, for Defendant-Appellee Brigade Capital Management, LP.

Uri A. Itkin (Jennifer E. Poon, on the brief), Akin Gump Strauss Hauer & Feld LLP, New York, NY, for Intervenor-Defendant-Appellee Highland CLO Funding, Ltd. SARAH A. L. MERRIAM, Circuit Judge:

Plaintiff-appellant NexPoint Diversified Real Estate Trust (“NexPoint”), a noteholder in a collateralized loan obligation (“CLO”), appeals from the dismissal by the District Court (Gregory H. Woods, J.) of its claim under §215(b) of the Investment Adv