A heated legal battle between Ameriprise Financial and LPL Financial over advisor recruiting practices is intensifying, with both sides exchanging sharp accusations as a federal judge nears a decision on the case.
Ameriprise filed a lawsuit against LPL in July, alleging that LPL encouraged advisors departing Ameriprise to take confidential client information. The lawsuit centers on a software tool LPL provided to new recruits, which allegedly facilitated bulk data uploads. Ameriprise is seeking an injunction to halt what it calls LPL’s “ongoing misappropriation” of client information while it also pursues a related arbitration case.
In response, LPL contends that it has not used this tool with Ameriprise recruits in recent years, calling Ameriprise’s complaint “a public relations stunt masquerading as a lawsuit.” In an October 17 filing, LPL argued that granting Ameriprise’s injunction would stifle competition, discourage recruiting, and prevent clients from working with their preferred financial advisors.
The case is set for a hearing before Judge Jinsook Ohta on November 14, with a ruling expected soon after.
Ameriprise’s spokesperson claims that LPL’s recruiting practices violate industry standards and client privacy rights. “LPL’s conduct disregards all reasonable client privacy expectations,” the spokesperson stated, adding that LPL’s approach exposes recruited advisors to regulatory and potentially criminal risks.
LPL’s executive vice president of business development, Scott Posner, countered, asserting that LPL “recognizes and respects that advisors own their businesses and client relationships.” Posner reiterated LPL’s commitment to compliance and support for advisors’ freedom to move between firms, maintaining that LPL’s success in recruiting stems from a focus on advisor independence and marketplace innovation.
Lawsuits against competitor firms are rare, although firms occasionally pursue legal action against advisors accused of taking confidential client information when they move to another employer. This dispute between Ameriprise and LPL, two of the largest U.S. wealth managers with over $1.5 trillion in assets each, underscores the high stakes involved.
LPL’s advisor count has surged in recent years due to acquisitions and aggressive recruitment, rising from just over 16,000 advisors at the end of Q2 2019 to over 23,000 today. Ameriprise, with more than 10,000 advisors, also operates a sizable independent broker-dealer network.
Ameriprise has filed multiple lawsuits against advisors who joined LPL, accusing them of improperly taking client information. Recent legal developments include a federal judge’s decision on Monday to grant Ameriprise a temporary restraining order against LPL and advisor Douglas Kenoyer. Ameriprise alleges that Kenoyer and LPL improperly solicited clients to transfer accounts to LPL before his official transition.
The judge’s order bars LPL and Kenoyer from soliciting Kenoyer’s former clients and requires them to return any Ameriprise trade secrets. Kenoyer, who managed 583 clients and $144 million in assets at Ameriprise, allegedly inherited a significant portion of his book from a retired advisor, per an October 14 Ameriprise complaint in federal court.
Ameriprise is simultaneously pursuing arbitration against LPL and Kenoyer, and expressed satisfaction with the recent court ruling. “This case exemplifies LPL’s willingness to put advisors and clients at risk by flouting industry recruiting protocols,” said a spokesperson, referring to an agreement that allows advisors to take limited client contact information when changing firms. Both LPL and Ameriprise are members of this Broker Protocol.
LPL and Kenoyer deny Ameriprise’s allegations. Kenoyer’s attorney declined to comment on the matter.
The ongoing dispute reflects a similar strategy by Ameriprise in the Kenoyer case, with the company seeking both arbitration and an injunction to retrieve proprietary information allegedly taken by LPL.
Ameriprise’s initial lawsuit claims LPL instructed recruits to take highly sensitive client data—including Social Security numbers and account numbers—to facilitate client solicitation, which Ameriprise argues exceeds what is allowed under the Broker Protocol.
“LPL’s actions disregard client privacy rights, putting its recruited advisors at regulatory and potential criminal risk,” Ameriprise asserts in its federal lawsuit filed in San Diego, where LPL is headquartered.
In seeking an injunction, Ameriprise contends it meets the criteria: it has a strong likelihood of success in arbitration, would suffer irreparable harm without an injunction, and that an injunction serves the public interest.
LPL’s October 17 response urged the judge to deny the injunction request, asserting that Ameriprise’s case lacks merit. LPL states that it does not instruct new recruits on what client information to bring but instead advises them to seek outside legal counsel if necessary.
According to LPL’s filings and a September 19 declaration from Candi Sinquinami, LPL’s VP of business transitions, the bulk upload tool was previously available to Ameriprise recruits but has not been provided since 2021. LPL maintains that it ceased offering this tool to Ameriprise recruits following a separate arbitration case involving a former Ameriprise advisor.
LPL argues that an injunction would unduly limit advisors’ and clients’ choice in firms. “Ameriprise, losing advisors to competitors, seeks to deter further departures through baseless legal action,” LPL stated in its court filing, adding that advisors prefer LPL’s platform for supporting independence, while Ameriprise, in their view, does not.
In an October 24 filing, Ameriprise repeated its call for a preliminary injunction, warning that it faces irreparable harm without one. The filing also notes that the bulk upload tool facilitated the transitions of 30 advisors from Ameriprise to LPL over three years. These advisors allegedly retain information on more than 4,500 Ameriprise clients, with $1 billion in assets and $16 million in annual revenue, potentially stored on unsecure personal devices.
Ameriprise asserts that LPL bears the responsibility to comply with the Broker Protocol, and says the alleged misappropriation persists even without the bulk upload tool.
In a November 4 response, LPL noted that Ameriprise has been aware of the bulk tool’s previous use for over a year, through a separate arbitration case. “The harm Ameriprise alleges ceased years ago, regardless of Ameriprise’s awareness,” LPL stated.
