Ameriprise Financial has filed a lawsuit against LPL Financial, alleging that the California-based competitor actively recruited Ameriprise’s financial advisers and instructed them to illegally take confidential client information. The Minneapolis-based financial services firm is seeking monetary relief through arbitration and has filed a federal complaint in the U.S. District Court for the Southern District of California against LPL Financial, seeking a permanent injunction. According to court filings, Ameriprise claims that LPL encourages and instructs its recruits to “harvest confidential client information from Ameriprise’s systems” and transfer that data shortly after joining LPL.
The lawsuit alleges that LPL provides recruits with tools such as a “bulk upload spreadsheet” to facilitate the transfer of sensitive client information. Ameriprise stated that LPL has added nearly 800 registered representatives so far this year, with a significant number coming from Ameriprise. The lawsuit alleges that many of these recruits engaged in similar misconduct, following a pattern of misappropriation of confidential client data.
LPL defended itself in a statement, saying, “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.
Ameriprise alleges data theft by LPL
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 argues in its suit that once a registered representative terminates their affiliation with a firm, the use of customer information without the customer’s express prior consent violates U.S. Securities and Exchange Commission regulations.
Ameriprise also states that certain protocols allow representatives transferring from one firm to another to take only limited client information. The company accuses LPL of encouraging departing advisers to take substantial client documents and confidential client information well beyond what is permitted, including Social Security numbers, account numbers, routing numbers, account values, and funds available. Michael Taaffe, outside counsel for Ameriprise, said in a statement, “The pattern of behavior conducted by LPL is both shocking and concerning.
For years, LPL has flagrantly disregarded industry protocols in how it recruits financial advisors — mishandling trade secrets and sensitive client data to which they are not entitled.”
Ameriprise claims it has sustained “irreparable injury” and is asking the arbitration panel to force LPL to relinquish profits, bonuses, and other forms of compensation related to the alleged misconduct. Ameriprise also seeks punitive damages, pre-judgment and post-judgment interest, and attorneys’ fees. The average FINRA arbitration case closes in 15.7 months, according to the authority’s website.
Ameriprise is requesting the arbitration panel take place in San Diego, near LPL’s headquarters.
