# kaal:claim:2337268-001

**Claim.** The Investment Advisers Act prohibits contingent fee arrangements between investment advisers and their clients because such arrangements could induce inappropriate risk taking by the adviser.

**Type.** mechanism  **Support.** asserted

**Holds when.**

- advisory contracts governed by the IAA
- outside the post 1985 exemption for certain qualifying large advisory contracts

**Source quote.**

> Because contingent fee arrangements could lead to inappropriate risk taking by investment advisers, contingent fee arrangements between investment advisers and their clients are prohibited.7

**From.** Wulf A. Kaal, *Investment Adviser Regulation* (2013), Introduction, page 4

**Cite as.** Wulf A. Kaal, Investment Adviser Regulation (2013). SSRN: https://ssrn.com/abstract=2337268

**Verify.** sha256 of source PDF `7075ce35282a8ee75b81ae3dec0e19f68631beae7f3c3a00ab2827538dc9e302` at https://raw.githubusercontent.com/wulfkaal/Academic-Papers/main/papers/pdf/Kaal%20-%202013%20-%20Investment%20Adviser%20Regulation.pdf

**Topics.** private-funds, risk-and-incentives

**Keywords.** investment-advisers-act, contingent-fees, risk-taking, advisory-contracts

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