# Investment advisers act `kaal:entity:investment-advisers-act` **Status.** derived This node is assembled mechanically from the 7 claims that carry the concept tag `investment-advisers-act`. It is a roster of what the corpus says under this term. It is **not** an adjudicated definition: no single statement here has been ruled canonical, and no first-appearance call has been made. Read the claims and judge for yourself. ## Every claim under this term 7 claims across 4 works, 2013 to 2017. **2013** - [2337268-001](https://wulfkaal.github.io/claims/2337268-001) [mechanism/asserted] -- 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. > 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 Wulf A. Kaal, Investment Adviser Regulation (2013). SSRN: https://ssrn.com/abstract=2337268 - [2337268-003](https://wulfkaal.github.io/claims/2337268-003) [condition/asserted] -- Exemption from registration under the IAA does not exempt an adviser from the antifraud provision, which reaches both negligent misstatements and misstatements made with intent to defraud. > Investment advisers who are exempt from registration are still subject to the IAA's antifraud provision,6 which applies to negligent misstatements and misstatements made with the intent to defraud. Wulf A. Kaal, Investment Adviser Regulation (2013). SSRN: https://ssrn.com/abstract=2337268 - [2337268-042](https://wulfkaal.github.io/claims/2337268-042) [condition/asserted] -- The IAA bars compensation tied to the performance of the client's account but permits compensation tied to the average value of the client's assets, so fee regulation targets performance linkage rather than asset based fees. > It also prohibits performance-based compensation if the adviser's fee is linked to the performance of the client's account.110 The IAA does, however, allow investment advisers to tie their compensation to the average value of the client's assets.111 Wulf A. Kaal, Investment Adviser Regulation (2013). SSRN: https://ssrn.com/abstract=2337268 **2016** - [2714974-003](https://wulfkaal.github.io/claims/2714974-003) [mechanism/asserted] -- The SEC's 1985 safe harbor in Rule 203(b)(3) allowed a limited partnership itself, rather than each of its limited partners, to be counted as a single client of the general partner acting as adviser, which is what kept hedge fund advisers below the registration threshold. > the safe harbor provision allowed a limited partnership, rather than each of its limited partners, to be counted as a "client" of a general partner acting as investment adviser to the partnership Kaal and Oesterle, The History of Hedge Fund Regulation in the United States (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2714974 - [2714974-004](https://wulfkaal.github.io/claims/2714974-004) [mechanism/asserted] -- Expanding the client counting safe harbor in 1997 to cover legal entities generally allowed investment advisers to manage large amounts of securities indirectly for several hundred investors across multiple hedge funds without registering. > This safe harbor allowed investment advisers to manage large amounts of securities indirectly for several hundreds of investors in several hedge funds. Kaal and Oesterle, The History of Hedge Fund Regulation in the United States (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2714974 - [2715083-014](https://wulfkaal.github.io/claims/2715083-014) [failure/argued] *(failure mode)* -- Identical rules diverge in practice because the two vehicle types are structured, operated, and run as businesses differently; the Investment Advisers Act applies to both, yet its obligations are far more onerous for mutual fund managers. > While the applicable statutes and regulations may appear to apply nominally to both mutual and hedge fund managers, the nature of how the investment vehicles are structured, operated, and how they conduct business can make their application materially different in practice Kaal, Confluence of Mutual and Private Funds (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2715083 **2017** - [2998097-001](https://wulfkaal.github.io/claims/2998097-001) [mechanism/argued] -- The Investment Advisers Act safe harbor let an adviser count an entire legal organization as one client, provided the advice followed the organization's objectives rather than those of its individual owners, which is what allowed advisers to manage money for hundreds of underlying investors while staying exempt. > investment advisers to private investment funds were able to count a legal organization as a single client provided the investment advice was based on the objectives of the legal organization rather than the individual investment objectives of any owners of the legal organization. Wulf A. Kaal, Private Investment Fund Regulation - Theory and Empirical Evidence from 1998 to 2016 (2017). SSRN: https://ssrn.com/abstract=2998097 ## Verify Every claim above resolves to a record carrying a verbatim source quote, the sha256 of the source PDF, and a preformatted citation. Nothing here asks to be taken on trust. curl -s https://wulfkaal.github.io/entities/investment-advisers-act.md | sha256sum **Canonical form.** This markdown file is the canonical hashed representation of this entity node. Its sha256 is the content hash.