Is Carried Interest Ribbit?

Question

In Halacha, is carried interest prohibited as ribbit? So Jew 1 owns an investment management fund, Jew 2 goes to him and pays for the value of the profit from the stock trading, and in exchange for managing the stocks in the fund Jew 1 gets 10% of the profit as a commission, is this prohibited as Ribbit?

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Answers

  1. The Just Ask! - AskTheRabbi.org Team

    Ribbit in general is a very specialized and complex subject and if there is a practical dimension to your question you should really ask it to an expert in the Laws of Interest.

    In my non-expert understanding, it could be construed as ribbit and there needs to be a Heter Iska between the two parties. Any Orthodox Jew running a management fund (or anything remotely similar) needs to have a Heter Iska to ensure that there are no ribbit issues.

    Best wishes from the AskTheRabbi.org Team