Ameriprise Financial has filed a lawsuit against LPL Financial, accusing the broker/dealer of misusing private, confidential customer information while recruiting advisors “in connection with its unfair competition within the financial industry.”
Ameriprise filed suit in the US District Court for the Southern District of California, alleging that LPL is directing recruits to take customer information and trade secrets when they leave the firm. The brokerage's complaint says LPL's practices are widespread and violate the Trade Secrets Protection Act, Securities and Exchange Commission and Financial Industry Regulatory Authority rules, and the Intermediary Recruitment Protocol.
The complaint states that Ameriprise advisers represented a small amount of new LPL recruits this year, but a large percentage of those who left Ameriprise for LPL engaged in misconduct.
“LPL's behavior is unacceptable and abandons all reasonable notions of customer 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 puts clients at risk by instructing its advisors. Recruiters upload spreadsheets of confidential customer information into LPL's systems—including, but not limited to, social security numbers, date of birth, net worth, and detailed account information—on unauthorized customers without their knowledge or prior consent.”
A spokesperson for LPL did not return a request for comment prior to publication.
Ameriprise is seeking a preliminary injunction that would prevent LPL from retaining and using Ameriprise customer information.