For Traders, the FTC Ban on Non-Compete Clauses Comes With Big Catches
- Wall Street firms can still impose garden leaves on defectors
- Though rule covers money managers, FTC doesn’t regulate banks
Traders work on the floor of the New York Stock Exchange.
Photographer: Michael Nagle/BloombergThis article is for subscribers only.
Wall Street traders and money managers could be in for disappointment if they’re hoping a new US ban on non-compete clauses will clear the way for them to spring into the arms of higher-paying competitors.
The Federal Trade Commission’s sweeping prohibition on efforts to prevent staff defections makes an exception for mandatory garden leaves. Those have become a common facet of finance-industry contracts for employees privy to sensitive information, such as knowledge of a money manager’s trading strategies or pending deals.