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Most people who leave one job for another make the transition smoothly; they learn of a new position, apply, interview, and win the post. Notice is provided to the current employer. The split is amicable. Everyone goes forward. On some occasions, however, ethical turbulence occurs because obligations to the current employer are broken along the way out. These are some of the most commonly encountered flashpoints:
Successful stockbrokers share some basic skills. One is the ability to manage reams of information about diverse investments. The options they need to organize run from humdrum treasury bills, which are safe investments but don’t earn very much, to stock in companies like Google, which first went on sale in 2004 at a price of $85. By 2007, that same share cost more than $600. Other start-up companies also began selling shares in 2004, but it’s harder to remember their names since they went broke. Now it’s not the stockbrokers’ job to determine which investments are reliable and which more explosive; that’s handled by specialized analysts. What stockbrokers do is arrange the possibilities into clear groups of more and less speculative investments, then they provide options to their clients.
Talking and helping clients choose good options is another key stockbroking skill. To do that, brokers need to understand clients’ situations and aspirations. If you’re a young client with some extra cash, you may want to take a risk. But if you’re nearing retirement, you may figure it’s best to play it safe. Regardless, the stockbroker-client relationship tends to be fairly sticky once it’s fully established because they’ve spent real time talking seriously: to help their broker work, clients need to open up about themselves, their current reality, and their hopes for the future. After that, it’s difficult to just switch out of the relationship.
How do stockbrokers make money? They get a small percentage of every investment they oversee, and the larger brokerage firm, say, Smith Barney, gets a cut too. At least that’s the way it works on a day-to-day basis. There is, however, another option for brokers, at least for ones who’ve accumulated a good, trusting client list. They can switch firms for money. For a lot of money because brokerage houses fall over themselves rushing to offer large signing bonuses to those employees who can bring a long client list with them.
After a deal to jump to another brokerage house has been struck, the stealth begins. One way or another, the broker needs to get his or her client files. It’s a delicate operation; computers in most brokerages don’t have USB drives, so you can’t just pull the information off the hard drive. You’ve got to print it all out or find some way to access the mainframe with a thumb drive. Regardless, brokers need to get those files because they hold each client’s investment history and notes brokers use to remember their clients’ stories, their family members, and all the little things that make the personal relationship work.
With the client information in hand, the broker prepares for the nail-biting day of the actual switch. A letter is written to clients (though not yet sent) reporting the broker’s move to the new firm, and explaining why it’s a good change—or just not bad—for the clients’ interests. Instructions and the necessary forms are included for clients to transfer their accounts easily and fast. The day before the change, the letters are delivered to the central post office. The next morning, the broker resigns and hurries out of the office. With the first step outside, she hits the call button on her cell phone. A long and frantic day has begun: starting with the largest investor and running down the list, she telephones to explain what’s happening, and to ask each client to stick with her through the switch.
Back at the old office, intense damage control begins. The manager rushes to divide up the ex-worker’s client list among the remaining brokers, and they start phoning, pleading with the clients to stay with the old, reliable firm.
Usually, most clients go.
For the moment, that’s the end of it. But the switching will fire up again because a brokerage house that’s lost a rainmaker may go after one of the major brokers at another house. More, a broker who’s jumped ship once for money might be tempted to do it again. Eventually, the wheel may get going so fast that no one can keep straight who’s working where.
Facing the possibility that the whole thing could spin out of control, the poaching brokerage houses mutually disarmed in 2004 by drawing up a protocol for broker recruiting. The legally binding agreement—which all employees were asked to sign—allowed brokers to take their clients’ names and contact information when changing jobs, but nothing else, none of the investment history. That made the switch much more difficult since office-jumping brokers would need to rebuild their client relationships almost from scratch.
Neither Bernadette Holland nor Amy Villani wanted to do the rebuilding when they jumped from the Smith Barney brokerage house in Bethlehem, Pennsylvania, to Janney Montgomery Scott LLC of Philadelphia in late 2008, so they took their client files with them. At least that’s what Smith Barney maintained when they filed a lawsuit against the two women. Their complaint alleged, “The brokers took with them customer files and information, despite their written assurances that they had complied with the protocol for broker recruiting, which expressly prohibits them from taking such files.”Bruce Kelly, “Smith Barney Seeks Restraining Orders against Four Ex-Reps,” investmentnews.com, accessed May 17, 2011. http://www.investmentnews.com/article/20090224/REG/902249971.
Time abuseThe use of company time for activities unrelated to work, including looking for a job elsewhere. is the use of company time to seek another job. On the surface, it’s unethical. We need to be careful here, however, to distinguish exactly what “company time” means. Many jobs and work contracts are task related instead of time defined. That is, workers are hired to accomplish certain goals. In the construction business, a roofer may be signed up to get shingling done on a building before a certain deadline. In a case like that, there is no such thing as company time. The roofer’s free to work whenever and consequently to not work whenever. As long as the job gets done by the deadline, the obligation is fulfilled. So if he wants to sit up on the roof and field calls for new jobs, it’s hard to see ethical problems.
Problems do rise when workers are paid for their time. Most stockbrokers receive a base salary, a benefits package, or both as part of their work agreement. In exchange, they’re supposed to use the working day to pursue the brokerage’s interests, which means finding new clients and serving those already held. If Holland and Villani sat in the office talking with competing brokerage houses, they were breaking their obligation of fidelity—that is, their duty to honor their professional agreements. Of course they could respond that all workers take breaks. They eat a snack, sneak out for a cigarette, extend lunch. All those things are true. It’s also true, however, that the case can be made that those departures actually help employees do their job by providing the refreshment that comes with the occasional break from work. In the cases of Holland and Villani, it seems almost impossible for them to find a way to fold conversations with competing brokerages into the obligation to their current one.
Could those conversations be justified even while recognizing that they breach the duty to fidelity? Yes. The brokers could argue that another obligation simply outweighs their responsibility to maintain their working agreement with Smith Barney. Scratching the surface a bit on the Smith Barney situation provides an example. According to a story detailing the case in the Investment News,
Recruiters and executives from rival firms said the Smith Barney reps and advisers are continuing to leave the firm this year as it prepares to take the minority stake in a joint venture with Morgan Stanley, also of New York. Citigroup will exchange Smith Barney for a 49% stake in the new firm, dubbed Morgan Stanley Smith Barney, and a $2.7 billion cash payment.Bruce Kelly, “Smith Barney Seeks Restraining Orders against Four Ex-Reps,” investmentnews.com, accessed May 17, 2011. http://www.investmentnews.com/article/20090224/REG/902249971.
Smith Barney, this means, was being taken over by Morgan Stanley, and Smith Barney brokers were fleeing in droves.
Of course every ship-jumping broker will have unique reasons for leaving, but it does seem plausible that at least some brokers believed this new management wouldn’t serve their interests well, and, by extension, their clients’ interests. On this foundation, Holland and Villani could build an argument. Once it became clear that the kind of service they’d been offering their clients would be impossible under the new management, they could conclude that their service responsibility to clients outweighed their responsibility to honor a commitment to Smith Barney. From there, the case may be made for the two to use company time to pursue the possibility of working for another brokerage.
Finally, it’s easier from an ethical perspective if the two could just isolate any discussions with potential future brokerage houses to nonbusiness hours, to lunch breaks, and after 5:00 p.m. If that’s not possible, however, then the decision to impose on the working day will have to find an ethical justification.
Equipment-use abuseThe use of an organization’s equipment for activities unrelated to work, including looking for a job elsewhere. is occupying an employer’s computers, telephones, and similar as part of the effort to find a job elsewhere. In the case of the two Smith Barney brokers, just as they may have used hours, so too they may have used Smith Barney’s equipment to negotiate their moving to another firm. This isn’t a strong form of theft (assuming Holland and Villani didn’t carry the machines out the door), but it’s a betrayal of the obligation they received when they accepted the equipment—the obligation to use it to serve Smith Barney’s interests. Or to at least to not subvert Smith Barney. Visiting Facebook once in a while, in other words, is OK, but sending e-mails to competitors, not so much.
Skill theftTaking specific, job-related abilities acquired at one organization to another—especially a competitor. is taking specific, job-related abilities acquired at one company to another. Stockbroking—like many posts—requires extensive, job-specific training, and it can’t be picked up along the way: legally, you can’t work in the field until you’ve completed the required courses and passed subsequent exams. Typically, the company pays for the learning. The larger houses organize their own stockbroking universities: new recruits are gathered and privately hired teachers lead them through the materials. What’s learned? Beyond the Wall Street knowledge about stocks and bonds, there are guidelines to master about providing recommendations and specific rules to follow that ensure clients understand the risks involved in creating a portfolio, especially on the more speculative side of the investment spectrum. Stockbroking is also a job in sales: brokers need to learn the delicate art of touting their own services without making promises about returns that can’t necessarily be kept. Finally, there’s quite a bit of technical knowledge that needs to be acquired so brokers can adeptly manage job-related and sometimes complicated software programs. All of this is expensive. When a company hires, they’re making a major commitment and incurring a real cost.
What obligations does the cost create? The answer divides onto a legal side and an ethical one. With respect to the law, many hiring organizations incurring significant training costs write clauses into job contracts protecting against the loss if a fresh employee comes aboard for the training and then tries to leave and work elsewhere. Called a repayment clauseContractual stipulation that departing employees may be billed for their training if the departure occurs before the employer has recouped the cost of the training., it stipulates that departing workers may be billed for their training. In a typical clause, the cost must be repaid completely if the employee leaves immediately, and then a declining percentage is repaid if the departure occurs after three, six, nine months, and so on. (Here’s an Internet board where workers discuss the clause and ways of getting out of it: http://www.i-resign.com/uk/discussion/new_topic.asp?t=648.“Repayment of Course Fees,” I-resign.com, accessed May 17, 2011, http://www.i-resign.com/uk/discussion/new_topic.asp?t=648.)
Frequently, ethics and the law fail to overlap. In this case, however, an ethical solution to the problem of leaving an organization and taking your training with you may correspond with the strictly legal one. To the extent it’s possible to monetize the investment an employer makes in an employee, returning the money could satisfy several fundamental moral duties. The duty to not harm others is satisfied because the recouped funds may be applied by the organization to hire and train another employee. The duty of fidelity—keeping obligations—is satisfied insofar as the contract’s clauses are honored. Finally, the duty to reparation—to repay others when we harm them—is explicitly satisfied. The conclusion is that a stockbroker who takes a firm’s training and leaves may justifiably claim that the action was ethically acceptable because the contractual obligation was honored.
What if the contractual obligation isn’t honored? Is there any way for an employee to build an ethical case against repaying the company for training received? On the discussion board just mentioned, two routes are indicated. The first works from a utilitarian ethics, from the idea that the right action is the one bringing the greatest good to the greatest number. A contributor called there_are_many_questions writes,
I recently took a promotion at my current job and part of this was to study a level 4 course they had chosen. I had also applied to university, and due to the competitiveness of the course I wasn’t sure that I would get in. Hence the reason I agreed to go for the promotion. As it happens I have been accepted into university and I begin my course shortly. I knew that I would be required to pay back the cost of the course fees but it turns out, that they were more then I was originally told. To add, because I am becoming a full time student I am unlikely to have a permanent income.there_are_many_questions, April 4, 2009 (4:26 p.m.), “Repayment of Course Fees,” I-resign.com, accessed May 17, 2011, http://www.i-resign.com/uk/discussion/new_topic.asp?t=648.
So this person applied to a competitive university and wasn’t sure about getting in. Faced with the uncertainty, he or she took a promotion at the current company, which required company-provided training. In the end, as it turned out, there_are_many_questions got into the university and so left the company. Now the company wants the course fees back. As the writer notes, it’s probable that he or she won’t be able to pay them while enrolled as a student.
Looking at this situation, there’s no doubt here that the abandoned company has a strong ethical case. “Why is there_are_many_questions paying a university for classes when he or she already owes us for classes taken?” Good question. Here’s a utilitarian response: when everyone’s interests are fully taken into account, the decision to go to university and shaft the company does, in fact, serve the greater good. The abandoned company is damaged, no doubt, but really, unless it’s a small company on the brink of bankruptcy, it seems likely that they’ll absorb the loss and move on. Further, there_are_many_questions had just been promoted by the company, so, obviously, he or she had been doing good work for them; it’s not as though the entire professional relationship will be a pure loss. The jilted company, finally, will suffer the employee’s abandonment, but probably get over it without suffering lasting damage. There_are_many_questions, on the other hand, has a singular opportunity. The university is competitive—so much so that there was real uncertainty about gaining admission. To leave that opportunity behind simply to honor the clause of a contract seems like a choice causing real unhappiness, one that will continue over the long term. There’ll always be that feeling of “what if?,” as in “What if I’d just walked and gone to the university to learn to do what I really wanted?” In sum, when you weigh on one side the damage caused to the company by a departing employee who doesn’t refund training costs, and on the other side you weigh the damage done to there_are_many_questions if the university course is abandoned to repay the company’s training, it feels like there’s an imbalance. When viewed dispassionately from outside the situation, the greater good really is served by walking away from the debt and going to the university. No one is saying that walking away from debts is ethical, but it would be more unethical to let the university opportunity pass.
Another justification for walking away from the debt to the company could emerge along the lines of ethical egoism indicated by a contribution coming from Suze. She says the employee should hand over a bit of money and then “tell them to whistle for the rest, or else you will see them in court. I doubt they will pursue it.”Suze, January 6, 2005 (5:42 p.m.), comment to bradley, “Repayment of Course Fees,” I-resign.com, accessed May 17, 2011, http://www.i-resign.com/uk/discussion/new_topic.asp?t=648.
Solid ethical egoism. The right thing to do is the right thing for you, and that’s it. If you can get away with not paying, Suze says, then go for it. The reasoning is the company “probably won’t pursue it.” If they do, well then you might have to come up with the money. Until that happens, though, her advice is to protect your own interests, let the company take care of theirs, and see where things end up.
Client adoptionAn employee moving to a new organization and helping it appropriate the former organization’s client base. is moving to a new company and helping it appropriate part of the former company’s client base. Holland and Villani are perpetrators. In fact, this is the central idea behind their move: to transfer clients along with them.
With respect to the law, Holland and Villani are completely free to take their clients. It’s a black-and-white legal situation. All that’s in dispute is how much client information they can carry to their new office. And the ethics? The situation here seems fairly clear also, at least with respect to the brokers and the brokerage. There’s no doubt that both Holland and Villani on one side, and the Smith Barney brokerage house on the other, have a certain claim on the clients. While it’s true that the brokers did most of the work, the brokerage provided the infrastructure and opportunity. One way to adjudicate these competing claims when the broker and brokerage split is to check whether any prior agreements regulate the separation. In this case, an agreement does exist: the protocol for broker recruiting. The fact that the agreement is there indicates that all parties involved accept that brokers transferring and taking clients is part of the way things normally work: it’s fair. What needs to be settled, and what the protocol does presumably settle, are the rules for the process.
One difference, however, between ethics and the law in this situation is that ethical considerations open a broader scope onto the situation: the stakeholders increase. Where the law is concerned only with the brokerage house and the brokers, an ethical evaluation incorporates the clients as important since they’re tangibly affected by any decision. So what are the clients’ rights? How are they exposed by shifting brokers? Their first clear right is to say “no.” They’re under no obligation to follow when a broker changes firms, and there’s good reason to stay put. The paperwork involved in moving is significant. More, not all houses offer the same investments instruments, so there may actually be a cost involved as items in the portfolio are sold on one side so that a comparable product may be purchased from the new brokerage. This means the client really loses when they move along with a broker.
The clients are in a tough spot, though. Typically, they’ve invested a good bit of their own energy and time in fostering a broker-client trust and mutual understanding. There’s no guarantee—and this is especially true for longtime clients—that another broker would easily understand how the current portfolio fits together with the client’s life. If that’s right, then any client choosing to remain with the old firm will more or less have to start over by rebuilding their investments in consultation with whichever new stockbroker gets assigned to their case. More complications could be added, but the point is, the clients aren’t just bystanders. The brokers’ decision to change houses is going to affect them, and they may end up losing either way.
How do the clients’ interests—and the ethical responsibility to consider them—fit into the stockbrokers’ job switching? One way to begin reasoning toward an answer comes from Immanuel Kant’s categorical imperative, specifically the idea that we are to treat others as ends and never as means. Kant’s proposal is that we’re obligated, regardless of circumstances, to not treat others as tools or instruments; treating another as a “means” is just using them to get something else. So the question here for brokers when considering whether they hold an ethical license to do all they can to carry clients to a new firm becomes relatively simple. It would not be ethically recommendable if the change failed to serve the clients’ interests. If it doesn’t, if it turns out that the only people who come out ahead in all this are the brokers because they get a nice bonus from the new brokerage house for bringing over a busload of new investors, then what’s happening is the clients are reducing to mere means. They’re the tools the brokers use to get a payoff for themselves.
On the other hand, if the change does serve the clients’ interests, then Holland and Villani can say that they aren’t reducing the clients to nothing more than a payday, they’re actually treating the clients the way they themselves would want to be treated in that situation. In Kant’s language, the clients become “ends,” they’re no longer tools, and their interests can be considered a reason for Holland and Villani to make the switch. Now, we know from the case that Smith Barney was in the process of being engulfed by Morgan Stanley when Holland and Villani were making their move. If the brokers really believed that the services they could provide would be harmed by the change in corporate structure as Smith Barney became Morgan Stanley, and if they really believed their client services could be bettered by shifting over to the new brokerage house, then there’s space for claiming that bringing the clients along is morally right.
Market adoptionAn employee moving to a new organization and helping it appropriate the former organization’s market segment. occurs when an employee moves from one company to another and helps the new employer appropriate part of the former company’s market. On the surface, this resembles client adoption. A firm’s market—the people to whom they deliver goods or services—is a collection of clients, a set of people who pay for the company’s efforts. Even so, there are important differences between a market and a client, and they result in radical changes to the ethical atmosphere.
The fundamental difference between a client and a market is that clients have names and markets have definitions. Clients are individuals with whom a company has cultivated a relationship; markets are aggregates of people at whom companies aim their products. When Holland and Villani changed brokerage houses, they tried to take clients with them because they were people they’d really talked to; they knew their phone numbers and life stories. A market, on the other hand, is composed of people you don’t know; it’s just anyone who shares a set of characteristics. For example, a brokerage house may want more business from middle-aged adults starting to think about retirement. So what do they do? They put up TV ads showing a fiftyish husband and wife at the dinner table talking about something they’d like to do together, say, visit China for a month. They can’t go now. They’re both working full time scraping money to pay for the kids’ college and making mortgage payments. When they retire, though, they’ll have the time; the kids will be done with school, the house will be paid for. What they need to do now is plan the financial landscape. They have a question: what kind of investments guarantees their trip? The commercial ends with a tagline: “Smith Barney: For the Journey of Your Life.” That’s a bad commercial, but it shows what a market is. Smith Barney doesn’t care who shows up at their branch offices the next day. They don’t care if it’s Sam Smith or Jane Jones; they just want fifty-year-olds with some money to invest.
Many companies are constantly trying to convert markets into clients, trying to replace purely economic relationships with personal ones because people tend to stick with their brands. Markets, by contrast, shift easily; whichever company has the best TV commercial or the lowest prices, that’s the one that gets the largest chunk.
Our economy is built on the idea of competition for markets: the premise that they’re open and may be pursued by any organization is the basis for business activity. Obviously, there are islands of exception, things like trash collection performed by the city government. But for the most part, it’s nearly impossible to form an ethical argument against employees leaving one company and going to another and then chasing the same market. To be against it isn’t to be against one action or another on the part of an employee; it’s to be against the entire economic structure in which we live. (It’s possible to be against that structure, but that’s a different debate.)
Idea appropriationTaking ideas belonging to an organization and using them for your own benefit. occurs when an idea belonging to the old company is given over to the new one. If a chemist at Coca-Cola accepts a job at Pepsi and promptly reveals Coke’s secret formula, that’s idea theft. In the brokerage business at the level Holland and Villani worked, there probably weren’t too many secrets to steal. Clients yes, but no shadowy formulas for stock picking or anything like that.
Higher up in Smith Barney, however, it’s perfectly possible that analysts responsible for selecting stock winners (and weeding out losers) had developed an algorithm, a kind of recipe of numbers to produce answers. In the finance industry, those who rely on numbers—share price, a company’s annual earnings, and so on—to make stock predictions are called quants, which is short for quantitative data analyst. They take these numbers, stick them into a secret mathematical formula, and out pops another number presumably showing whether the stock is a good buy or not. These formulas are a brokerage’s concealed idea and, presumably at least, a key to their success: clients are going to flock to those brokerages consistently providing good stock-buying tips. Now if you happen to be a quant at Smith Barney, and you’re offered a similar position at a competing firm, can you take the formula with you?
This is a knotted question, both legally and ethically. Starting with the law, a company’s ideas are broadly divided into two categories: trade secrets and patented or copyrighted information. Trade secretsIdeas, technologies, and business strategies owned and maintained in secret by an organization. Typically they provide a competitive advantage. consist of nonpublic information that
Trade secrets (which are sometimes called proprietary data) are ideas a company develops and uses, and that they don’t want anyone to know about. In the case of the quants at Smith Barney, a formula for picking stock winners kept under lock and key would be a trade secret.
The other broad category of ideas belonging to companies is patented or copyrighted informationAn idea or information belonging to a company and protected from use by others by being publicly registered.. This is more or less a trade secret but without the secret. It’s an idea a company develops that helps it compete, but the strategy for protecting the idea from competitors is different. Instead of pretending like the idea doesn’t exist, or doing everything possible to make sure the details don’t leak, what the company does is make the idea public by registering it with the government, claiming thereafter the sole right to use the idea. After registration, the idea’s no longer a secret, but that doesn’t matter since anyone else who tries to use it is vulnerable to being sued.
So the recipe for Coke is a trade secret but not patented. If you can figure out what it is, you’re free to use it. The word Coke, on the other hand, is copyrighted. Everyone knows what it is, but you’re not allowed to use it, or at least not use it to label your own soft drink. The result of all this for an employee switching companies is that the legal questions involving stolen ideas tend to involve trade secrets. You can’t steal an idea that’s copyrighted because everyone knows that idea already. But a trade secret—the recipe for Coke, the formula an investment house like Smith Barney uses to pick stocks—that definitely can be stolen; it can be revealed to the new company.
The Economic Espionage Act of 1996 makes the theft of trade secrets a federal crime. The law is clear on the issue. The problem is it’s hard to prove that a trade secret is stolen. If you steal the recipe for Coke, you might disguise the theft by adding a tad more sugar to the version you make. Or, if you steal one of Smith Barney’s quantitative stock-picking formulas, maybe you adjust the numbers slightly: not so much that it effects the predictions, but enough to make the formula different. In these cases it’s going to be hard to absolutely prove the formula is stolen. In broad strokes, finally, the law of intellectual property is clear. When you get down into specific cases, however, things rapidly get twisted.
What are the ethics? If you’re a quant at Smith Barney and you get a call from your broker friends—Holland and Villani—saying that they’re taking their clients to a new firm and they’d like you to come along, bringing Smith Barney’s secret formula for stock picking as well, what kind of ethical responses are possible?
The “no” response is easily justified on moral grounds. The trade secret is company property, really no different from a computer or a desk, and taking it—even if you’re taking it by memorizing it and carrying it out in your mind—is theft just like stealing objects. Further support for the no answer comes from the responsibility to fidelity, the responsibility to maintain agreements. Almost all companies that work with trade secrets write a clause into employment contracts stipulating confidentiality on sensitive matters. So the ethical obligations not to steal, and to keep our word, make a good case for declining the request to steal an idea.
Going the other way, some situations allow a reasonable argument to be mounted in favor of leaving with the trade secret or proprietary data. One justification is authorship. Someone who provides a company with an invention can fairly expect to be rewarded by the company. Inventing an idea is labor like any other, and in any field people who do exemplary work can expect promotions and rewards from the larger organization. If, unfortunately, an inventor feels as though the company isn’t providing a reward—a promotion, a healthy bonus, or similar—then he or she may feel justified in leaving with his or her work, just as a good accountant may feel the need to look for employment elsewhere after being repeatedly passed over for promotion. The basic argument here is one of fairness. If a quant at Smith Barney invents an algorithm for stock picking that produces excellent results and then sits by and watches others who’ve contributed less receive larger year-end bonuses, the conclusion may be reached that for balance to be restored, it’s necessary to take the algorithm to another firm where a reward will be guaranteed.
Another ethical argument could be located in the difficulty that may exist in separating the skills an employee gains on the job from an idea or a certain kind of knowledge developed on the job. A quant who figures out a good algorithm may be able to claim that, as a skilled manipulator of numbers as they relate to economic markets, his ability as an analyst allows him to take the strategy with him. Stated differently, because of the unique skills possessed, when the quant is hired for a new brokerage, he would be able to just reinvent the algorithm. That’s possible because of the rare analytic talents the quant possesses, not because the old algorithm is being stolen. In general, it can be very difficult to separate skills as they relate to ideas from the ideas themselves. And in this case, it may be that the quant’s skills provide a license to regenerate the stock-picking algorithm for whatever firm is paying the salary.
Finally, an ethical case for the revelation of a trade secret may be made on humanitarian grounds. It’s difficult to envision a good example of this is in the world of stock picking, but in the no-less-lucrative field of medical research, a humanitarian context for taking an idea easily comes into focus. If a cure for cancer were invented by a private company, the stock value would blow through the roof, but only if they kept the drug formula secret and sold the serum at a fairly high price. In this case, a worker in the company may feel justified in taking a job with an international health nonprofit, and then revealing the serum’s formula and the technique for its production so that it could be made and distributed at a low cost to all those in need throughout the world. A theft would be committed and a wrong done, but an obligation to the greater good, to the health benefits the theft would allow, may justify a departing worker’s carrying a company’s secret out the door.