SYMPTOM:
This issue occurs for a user which has been given Full Control to a user group in the user group's ACL (Access Control List).
When this user attempts to create a new user, or delete an existing user in the user group mentioned above, the following error is seen even though the user has Full Control over the group for which they are trying to modify.

CAUSE:
This is known issue in Strategy 9.x.
ACTION:
Strategy will continue to investigate and post updates as soon as they are available.
WORKAROUND:
A possible workaround is to grant Full Control and/or Modify permission to the "User Manager" and choose to "Apply changes in permissions to all children objects" as well as "Overwrite children's ACL recursively". This will enable the user to create new users or delete existing users. However, this will apply to all user groups, so it may not be a viable solution for some users.