Ameriprise Financial and LPL Financial are engaging in an “economic war” over advisors leaving Ameriprise for the independent broker/dealer, according to recent legal filings.
In separate lawsuits in Washington and California, the two firms are battling over advisors fleeing Ameriprise for LPL, allegedly breaching their contracts, violating the Protocol for Broker Recruiting and taking with them confidential client information.
This week, Douglas Kenoyer, a former Ameriprise advisor who left for LPL last month, responded to a lawsuit filed against him by Ameriprise as being made “without any regard to the truth.”
“Simply put, Ameriprise is filing baseless cases as a tool of corporate warfare,” the Kenoyer response read. “Individual advisors like Kenoyer (and their clients, if the motion is granted) are caught in the crossfire.”
He called the lawsuit the “latest salvo in an economic war” Ameriprise is waging against LPL and former Ameriprise advisors in the courts.
The lawsuit Amerprise filed in Washington federal court on Oct. 14 alleged LPL helped Kenoyer breach his contract with his employer when he left to join the IBD last month. At the time he resigned, Kenoyer, an independent franchise advisor in Spokane, Wash., serviced 583 clients with more than $144 million in managed assets, most of which he acquired from a departed Ameriprise advisor.
Ameriprise argued he began illegally soliciting clients months before he changed firms. Ameriprise accused Kenoyer of taking confidential client information when he left and argued that LPL knew (or should have known) about this alleged deception.
According to Kenoyer, the lawsuit is the fifth case or arbitration Ameriprise has filed in the last six months against advisors who left for LPL.
LPL also responded to the lawsuit, arguing the company offered no evidence that LPL illegally aided its new hire in taking client information from Ameriprise. Instead, LPL alleged that Ameriprise’s “true goal” was to stop LPL from soliciting any employees whatsoever.
“For years, advisors have left Ameriprise for many reasons, including that LPL offers a superior opportunity for them to serve their customers,” the LPL response read. “Frustrated by its failure to compete in the market, Ameriprise has become increasingly desperate to stamp out competition from LPL and is abusing the courts in an attempt to meet its ends.”
An Ameriprise spokesperson told WealthManagement.com that Kenoyer had “misappropriated sensitive client data and stole trade secrets” and said the firm was looking forward to presenting its evidence in court.
“Time and time again, LPL struggles to recruit advisors by the terms of the Protocol for Broker Recruiting, putting advisors and clients at risk," the spokesperson said.
LPL also responded this week to a separate lawsuit filed in California federal court by Ameriprise, stating the company’s complaint is “a public relations stunt masquerading as a lawsuit.”
In that case, Ameriprise claims LPL is engaged in “widespread” misuse of confidential client information when recruiting advisors, leading to “unfair competition” in the industry. In the suit, Ameriprise claimed LPL directed recruits from Ameriprise to take client information when they left. In a statement at the time, an Ameriprise spokesperson said LPL’s conduct was “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,” Ameriprise spokesperson Ali Mueller said at the time.
But in a response filed this week, LPL stated, “Advisors’ preference for LPL is not surprising: while LPL champions the independence of its advisors, Ameriprise gives it only lip service.”
Both LPL and Ameriprise are signatories of the Protocol for Broker Recruiting, established in the early 2000s to stem a rise in intra-broker/dealer lawsuits over departing advisors soliciting former clients after joining their new firms.
According to LPL, the IBD had considered all its Ameriprise advisor hires as occurring under the strictures of the Protocol since 2022, “no matter what an advisor may believe their contract entitles them to retain when leaving Ameriprise,” and said its advisors who moved between the firms declared under penalty of perjury they followed the Protocol when leaving Ameriprise.
LPL also accused Ameriprise of a “remarkable hypocrisy,” arguing the firm touted its “independent advisors” to entice reps into its indie channel.
“The independent model rests on the foundational premise that the customer relationship belongs to the advisor, not the firm,” the LPL response read. “Yet in this lawsuit, Ameriprise refers to these customers as ‘Ameriprise customers’ and asserts that departing advisors have no right to retain their data, even when the advisors brought the customers to Ameriprise.”
Both lawsuits are ongoing. LPL declined to comment on the California suit, while a spokesperson for Ameriprise argued the case against LPL was “clear, compelling and concerning” and that there’d been a widespread pattern of LPL encouraging and misleading advisors to violate the Protocol and other regulations.
"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," the Ameriprise spokesperson said.
