For Traders, the FTC Ban on Non-Competes Comes With Big Catches

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.

As long as a firm keeps paying a departing employee normal wages during a required garden leave, it ...