INVESTMENT ADVISORS AND NONCOMPETE AGREEMENTS
The news from Wall Street has been anything but upbeat! Merrill Lynch & Company is sold to Bank of America, AIG faced a liquidity crisis following the downgrade of its credit rating. The Federal Reserve loaned money to AIG to prevent the company’s collapse. Lehman Brothers, a global financial services firm, files bankruptcy. Bad news indeed!
Many stock brokers and investment advisers of these failed financial institutions are evaluating their future employment. Do they stay with their company…and if they do, can the company survive economic disaster? Complicating this decision is the fact that most of these financial advisers have signed a non-compete agreement with their employer.
My advice to those investment professionals: Better consult with a knowledgeable attorney before you strike out on our own to open an independent financial investment business or join another company like Charles Schwab Corp., Fidelity Investments, Edward Jones, Morgan Stanley Dean Witter, and others. Whether the noncompete is valid and enforceable will depend upon the applicable state law.