Ameriprise Financial and LPL Financial are engaging in an “economic war” over advisers leaving Ameriprise for the independent broker/dealer, according to recent legal filings.
In separate lawsuits in Washington and California, the two firms are fighting over advisers who defected from Ameriprise for LPL, allegedly breaching their contracts, violating the Broker Recruiting Protocol and taking confidential client information with them.
This week, Douglas Kenoyer, a former Ameriprise adviser who left for LPL last month, responded to a lawsuit brought against him by Ameriprise by being “regardless of the truth.”
“Simply put, Ameriprise is filing baseless cases as a tool of corporate warfare,” Kenoyer's response said. “Individual counsel like Kenoyer (and their clients, if the motion passes) are caught in the crossfire.”
He called the lawsuit “the latest battle in an economic war” that Ameriprise is waging against LPL and former Ameriprise advisers in the courts.
The Amerprise lawsuit filed in Washington federal court on Oct. 14 alleged that LPL helped Kenoyer breach his contract with his employer when he left to join IBD last month. At the time he resigned, Kenoyer, an independent franchise advisor in Spokane, Wash., served 583 clients with more than $144 million in assets under management, most of which he acquired from a departed Ameriprise advisor.
Ameriprise argued that he began illegally soliciting clients months before he switched firms. Ameriprise accused Kenoyer of taking confidential customer information when he left and argued that LPL knew (or should have known) of the alleged fraud.
According to Kenoyer, the lawsuit is the fifth case or arbitration that Ameriprise has filed in the past six months against advisors who left for LPL.
LPL also responded to the lawsuit, arguing that the company did not provide evidence that LPL illegally assisted its new hire in obtaining customer information from Ameriprise. Instead, LPL claimed that Ameriprise's “real purpose” was to prevent LPL from soliciting any employees.
“For years, advisors have left Ameriprise for many reasons, including that LPL provides a superior opportunity for them to serve their clients,” LPL's response said. “Frustrated by its failure to compete in the marketplace, Ameriprise has become increasingly desperate to eliminate competition from LPL and is abusing the courts in an effort to achieve its goals.”
An Ameriprise spokesman said WealthManagement.com that Kenoyer had “misused sensitive client data and stolen trade secrets” and said the firm was looking forward to presenting its evidence in court.
“From time to time, LPL struggles to recruit advisers under the terms of the Intermediary Recruitment Protocol, putting advisers and clients at risk,” the spokesperson said.
LPL also responded this week to a separate lawsuit filed in California federal court by Ameriprise, saying the company's complaint is “a public relations stunt masquerading as a lawsuit.”
In that case, Ameriprise alleges that LPL engaged in “extensive” misuse of confidential client information when recruiting advisers, leading to “unfair competition” in the industry. in suit, Ameriprise claimed to have recruits directed by LPL from Ameriprise to retrieve customer information when they left. In a statement at the time, an Ameriprise spokesman said LPL's conduct was “unacceptable and abandons all reasonable notions of customer privacy rights.”
“It also subjects the advisors it recruits to regulatory and in some cases criminal exposure by encouraging this type of behavior,” Ameriprise spokesman Ali Mueller said at the time.
But in a response filed this week, LPL stated, “Advisors' preference for LPL is not surprising: while LPL defends the independence of its advisors, Ameriprise gives it only lip service.”
Both LPL and Ameriprise are signatories to the Broker Recruiting Protocol, created in the early 2000s to curb an increase in broker/dealer lawsuits over departing advisors who seek out former clients after joining their new firms.
According to LPL, IBD had considered all of its employment of advisors at Ameriprise to have occurred under the Protocol's restrictions as of 2022, “regardless of what an advisor may believe their contract entitles them to retain when leave Ameriprise,” and said its advisers who moved between firms declared under penalty of perjury that they had followed the Protocol when leaving Ameriprise.
LPL also accused Ameriprise of “extraordinary hypocrisy,” arguing that the firm promoted its “independent consultants” to lure representatives to its indie channel.
“The independent model rests on the fundamental premise that the client relationship belongs to the adviser, not the firm,” LPL's response said. “However, in this lawsuit, Ameriprise refers to these customers as “Ameriprise customers,'' and asserts that departing advisors do not have the 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 lawsuit, while an Ameriprise spokesman argued that the case against LPL was “clear, compelling and disturbing” and that there was a widespread pattern of LPL encouraging and deceiving advisers to violate the Protocol and regulations. others.
“LPL is reckless and puts clients at risk by instructing new advisors it recruits to upload spreadsheets of confidential client information into LPL's systems—including, but not limited to, social security numbers, date of birth, value net, and detailed account information, to unauthorized customers without prior knowledge or consent,” the Ameriprise spokesperson said.