Ameriprise Financial has filed a lawsuit against LPL Financial, accusing the broker/dealer of misusing private, confidential client information during advisor recruitment “in connection with its unfair competition within the financial industry.”
Ameriprise filed the suit in the U.S. District Court for the Southern District of California, claiming LPL is directing recruits to take client information and trade secrets when they leave the firm. The brokerage’s complaint says LPL’s practices are widespread and violate the Defend Trade Secrets Act, Securities and Exchange Commission and Financial Industry Regulatory Authority rules, and the Protocol for Broker Recruiting.
The complaint states Ameriprise advisors represented a small amount of new LPL recruits this year, but a large percentage of those who left Ameriprise for LPL engaged in the misconduct.
“LPL’s conduct is unacceptable and abandons all reasonable notions of client privacy rights. It also subjects the advisors it recruits to regulatory, and in some cases, even criminal exposure by encouraging this type of behavior,” said Ali Mueller, a spokeswoman for Ameriprise. “LPL is reckless and putting clients at risk by instructing the new advisors it recruits to upload spreadsheets with confidential client information into LPL’s systems–including, but not limited to, Social Security numbers, date of birth, net worth and detailed account information, to poach clients without prior knowledge or consent.”
"Ameriprise’s actions are part of an ongoing effort to hinder competition in the financial services space and intimidate its advisors who might consider leaving to join another firm," said an LPL spokeswoman. "As a steward of independence in our industry, LPL will vigorously defend itself against these claims and all of Ameriprise’s equally frivolous cases."
Ameriprise is seeking a preliminary injunction that would prevent LPL from retaining and using Ameriprise client information.
