IAA Statement: FTC Non-Compete Clause Proposal
April 17, 2023
IAA VP of Communications & Marketing Janay Rickwalder | 703-357-3918
From Gail Bernstein, IAA General Counsel
While the Investment Adviser Association supports the objective of protecting the interests of employees and their ability to continue to work in their field after leaving their employment, the IAA is concerned that the potential impacts of the Federal Trade Commission’s Non-Compete Clause Proposal would result in unintended negative consequences for employers and employees, particularly in the case of investment advisers, which manage money as fiduciaries for their clients and are subject to a robust investor-protective regulatory framework.
In its comments on the proposal, the IAA explains that investment advisers use reasonable non-solicitation agreements, non-disclosure agreements, and non-compete clauses in their employment agreements for several important reasons, including to meet their regulatory obligations and protect their businesses, employees, and clients.
With this proposal, the FTC overlooks these legitimate purposes that reasonable non-compete clauses and other restrictive provisions play in the investment advisory industry. By eliminating their use, legitimate business interests of investment advisory firms will be significantly harmed because advisers would have inadequate protections for their trade secrets, intellectual property, and other proprietary information.