AP Agreements: Why Your Firm Needs Them and What They Should Address
In this age of heightened regulatory scrutiny and the ever increasing risk of litigation from former employees and customers, coupled with the need to protect valuable trade secrets, it has become a best practice—if not a legal imperative—for IBs to require associated persons (APs) to enter into AP agreements. AP agreements are designed to help reduce risks to IB employers and clarify expectations with APs. Moreover, without such an agreement, a court may find that an IB has no trade secrets and no ownership of such important information as customer contact lists, marketing strategies or key documents. AP agreements touch on several different areas of law—laws that are prone to shift—and are also subject to a dynamic regulatory environment. Thus, the preparation of AP agreements requires careful attention. However, a carefully crafted AP agreement can help minimize risks to both parties while also establishing the parties’ expectations. In addition to...