Federal proposal to ban noncompete clauses could affect RIA M&A
January 9, 2023 By Mark Schoeff Jr., Investment News If advisors who have less than a certain ownership threshold are free to leave an acquired firm, it could give buyers pause. A federal ban on contract clauses that bind workers to employers could affect how acquisitions of investment advisory firms are structured and influence financial advisor moves between firms. Last Thursday, the Federal Trade Commission released a rule proposal that would prohibit employers from using noncompete agreements that prohibit employees from joining rival companies. The agency said noncompetes are an “often exploitative practice” that suppresses wages and hinders innovation. The proposal follows a Biden administration executive order in July 2021 that outlined 72 initiatives across dozens of federal agencies designed to promote economic competition. An overview of the proposal says that one in five U.S. workers — or about 30 million people...
