Protective Agreement

D

daveed007

Hopefully one/some of you veterans will have some insight for me,
I just got a job at a trading firm. They're not exactly a "prop shop" as I understand from these forums. They only do automated trading and pay salary along with bonuses based "very loosely" on trading profits. My question is how my personal trading is affected by this new job. The Protective Agreement I signed is lengthy, but here is an excerpt that concerns me:

"The Employee will not...use any Confidential Information of the Company acquired by the Employee during the Employee's relationship with the Company for his/her own benefit or for the benefit...except where such disclosure is consented to, or approved by, the Company in writing."

How do they distinguish whether you use "Confidential Information" in your own personal trading? Do I have to notify the company of each and every trade I make? Does using TradeStation's automated strategy systems infringe on my firm's definition of "developing automated software" for personal benefits? Any ideas of standard industry practices would be helpful, as I'd rather not approach the company about this topic until I've at least established a solid reputation and some positive relationships in the firm. Thanks in advance for your help and advice.

Dave
 
Quote from daveed007:

Hopefully one/some of you veterans will have some insight for me,
I just got a job at a trading firm. They're not exactly a "prop shop" as I understand from these forums. They only do automated trading and pay salary along with bonuses based "very loosely" on trading profits. My question is how my personal trading is affected by this new job. The Protective Agreement I signed is lengthy, but here is an excerpt that concerns me:

"The Employee will not...use any Confidential Information of the Company acquired by the Employee during the Employee's relationship with the Company for his/her own benefit or for the benefit...except where such disclosure is consented to, or approved by, the Company in writing."

How do they distinguish whether you use "Confidential Information" in your own personal trading? Do I have to notify the company of each and every trade I make? Does using TradeStation's automated strategy systems infringe on my firm's definition of "developing automated software" for personal benefits? Any ideas of standard industry practices would be helpful, as I'd rather not approach the company about this topic until I've at least established a solid reputation and some positive relationships in the firm. Thanks in advance for your help and advice.

Dave
More...

Well ... you should have consulted an attorney before signing on ... that said ...go see an attorney - keep in mind that he might at some point say that only the firm can interpret the limits of the agreement and in that case you will probably need to talk with them for clarification and the attorney will guide you on how to conduct that conversation.
 
The problem IMO is that there is no definition of "Confidential Information" and therein lies the rub.

I've seen the similar thing in many documents speaking of "Intellectual Property".

When the Information and/or Property are not defined in explicit detail, then the terms become nebulous.

In the future, try to ensure that all terms of this nature are defined in their entirety as an appendix to the contract.

-jmho
 
Your agreement is un-enforcable as written. If you come up with some system on your own time at home and without the company's resources, then the company cannot own that system. Also, the company cannot prove what part of what you are doing was acquired by you through your employment and what part was gained prior or outside of business hours.

Nondisclosures are tricky and you need a very good lawyer who understands the precedence in your state to write one. I have a nondisclosure in my employment contract, but it is a lot more specific than that. The same goes for noncompete agreements. They both have been shot down consistently by courts across the country. These agreements cannot have sweeping clauses such as yours.

Caveat: You have to spend money to fight it off if the firm feels like you burned a bridge with them. In other words, many times the firm is aware that something is un-enforcable, but they can force you to pay to fight it off. Oftentimes, this can be done at no cost to them by using a collection agency to collect based on that clause alone.

Good luck.
 
We would need to see the whole agreement to know what is enforceable and what is not. What you posted was only a snapshot and can easily be taken out of context from the rest of the document. I have put together many NDA's and have signed many.

Something to consider is if you are successful in your trading and you build a very good working relationship with management they all understand that some day you will want to strike out on your own. Smart managers would rather invest with or place money to be managed with successful traders than to take someone green and hope they work out. It's no different than a trader managing money with say a Goldman or UBS striking out to start there own hedge fund. Many times the Goldman's of the world will place money with that trader and take a place on the board. Of course there are management types that are asses as well and would rather screw someone, hopefully you picked the right group to join.

There is always two sides to every coin.

Something to think about.

Bsulli
:)
 
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