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Bankers Beware—Trade Secret Misappropriation Can Lead to Lifetime Ban



Employees change jobs all the time. There is generally nothing wrong with an employee planning his or her next move while still employed. But when an employee’s plans include gathering up his or her employer’s trade secrets to use at a new place of employment, that calculus changes. An employee who shares his or her current employer’s confidential information with the new employer may be liable for trade secret misappropriation, and the new employer can be held liable for that unlawful disclosure as well. Indeed, as we have explained here before, Washington courts still sometimes enforce a duty of confidentiality that will protect information that may not rise to the level of an actual trade secret, but that the former employer nonetheless considers to be confidential.

For companies, such as banks, that operate in highly regulated industries, the balance can be even trickier. As demonstrated by the Federal Reserve’s recent action against two bank employees accused of trade secret misappropriation, federal regulators take allegations of trade secret misappropriation very seriously. In this case, the Federal Reserve is seeking to permanently bar two bankers from ever working in the banking industry again based on a judgment against them for trade secret misappropriation.

For employers in highly-regulated industries, this is a warning shot that care must be taken when recruiting or onboarding new employees to make sure that they leave behind anything that might be considered their previous employer’s confidential information.

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