Ameriprise Financial and LPL Financial have found themselves embroiled in a fierce "economic war" over the departure of various advisors from Ameriprise to the independent broker/dealer, LPL. Recent legal skirmishes in Washington and California reveal allegations of breaches in contract, supposed violations of the Protocol for Broker Recruiting, and accusations of advisors absconding with confidential client information.
In a particularly contentious case, Douglas Kenoyer, previously affiliated with Ameriprise, transitioned to LPL last month. This move triggered Ameriprise to take legal action against him, claiming he left “without any regard to the truth." Kenoyer rebuffed these accusations, stating that Ameriprise uses unfounded lawsuits as a weapon of "corporate warfare." Those advisors, like Kenoyer, are simply caught in the battleground of this economic conflict, according to his response.
Ameriprise has accused Kenoyer of soliciting clients unlawfully months before he officially moved firms. The firm maintains Kenoyer took sensitive client information when departing, further asserting that LPL must have been aware of, or involved in, these actions. This claim was strongly refuted by LPL, which remarked that Ameriprise’s lawsuit lacks substantial evidence. They assert the legal manoeuvre by Ameriprise is merely a tactic to halt LPL from engaging with its advisors.
They have pointed out that advisors are drawn to LPL because it seemingly offers a superior platform for client service. Ameriprise, they contend, is failing in competition and resorts to judicial avenues to suppress this perceived threat.
Furthermore, representatives from Ameriprise express disappointment at what they interpret as LPL’s “widespread misuse” of confidential information during advisor recruitment processes. They label this as unfair competition within the industry, arguing it threatens both regulatory compliance and client privacy rights.
On the opposite side, LPL has responded robustly, dismissing Ameriprise’s lawsuit as a "public relations stunt masquerading as a lawsuit." Their perspective is that the Protocol for Broker Recruiting, a set of guidelines initiated in the early 2000s, is being fully adhered to by advisors transferring from Ameriprise to LPL. From LPL’s point of view, the core of this independent advising model is that customer relationships remain with the advisors, not the firm, contrary to Ameriprise’s assertion that departing advisors must not retain client data.
Both firms, LPL and Ameriprise, are signatories to this crucial protocol. The progression of these legal confrontations will undoubtedly be pivotal for both industry dynamics and governance around advisor-client relationships.
An Ameriprise spokesperson has vocalized frustration over LPL’s alleged encouragement of its new advisors to upload detailed client information, suggesting these actions potentially lead to regulatory or even criminal risks. Meanwhile, LPL has criticized Ameriprise’s stance, dubbing it "remarkable hypocrisy," as Ameriprise recruits advisors for its independent channel yet later contests the independence of these very advisors.
The legal drama continues, with no end in sight. It seems that the tussle, much akin to classic British banter, is far from its final chapters. As accusations fly and responses grow more fervent, observers await eagerly to see how the courts will eventually rule.
