MFA urges FTC to reconsider non-compete ban for alts asset management industry

The Managed Funds Association, the global trade association representing the alternative asset management industry, has submitted a comment letter to the Federal Trade Commission on the proposed rule to ban non-compete agreements. 

The Managed Funds Association (MFA), the global trade association representing the alternative asset management industry, has submitted a comment letter to the Federal Trade Commission (FTC) on the proposed rule to ban non-compete agreements. 

MFA’s letter suggests a carveout to address concerns that the proposed rule is overly broad and could harm the alternative asset management industry’s legitimate need to protect confidential intellectual property and proprietary interests.
 
MFA members use ‘noncompetes’ to protect valuable proprietary strategies and processes resulting from expensive and time-consuming research and development. Noncompetes are typically limited to employees whose departure could expose this confidential information and cause competitive harm to the firm. Alternative asset managers leverage these proprietary investment positions and trading strategies to deliver returns for their institutional investors, including pensions, endowments, and foundations.
 
“Non-compete agreements play a critical role in protecting alternative asset managers’ proprietary information and investment strategies they rely on to deliver returns for institutional investors, like pensions, foundations, and endowments. A blanket ban on noncompetes will decrease new fund formation, harm industry competition and reduce choice for investors,” said MFA President and CEO Bryan Corbett. “We understand the FTC’s focus on American workers and their mobility but urge the Commission to pursue a balanced approach that fulfills their objectives without stifling innovation and harming investors.”