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June 27, 2024 at 05:03 PM
What You Need to Know
- Ameriprise says two advisors took confidential material before leaving for LPL.
- LPL contends Ameriprise is trying to intimidate advisors and stifle competition.
- The advisors agreed to a temporary injunction, putting their part of the case on hold.
Ameriprise Financial Services and LPL Financial are facing off in court and with arbitrators over a father-son advisor team who Ameriprise alleges took confidential information in “the dark of night” before leaving the broker-dealer for competitor LPL.
While Ameriprise contends its rival regularly encourages recruits to violate contracts with firms they’re leaving, LPL accuses Ameriprise of trying to intimidate advisors who might want to leave and stifling competition in the financial services industry.
In a complaint filed June 4 in U.S. District Court in Michigan, Ameriprise sought a temporary restraining order against LPL, Mitchell McCann and his son Wesley McCann pending a Financial Industry Regulatory Authority arbitration.
On Monday, the court agreed to stay the case against the McCanns only and approved a temporary injunction that Ameriprise and the McCanns agreed to, pending the FINRA arbitration, resolving Ameriprise’s request for a temporary restraining order against the two advisors.
The case as it pertains to LPL has not been stayed.
Actions Allegedly ‘Rife With Misconduct’
The temporary injunction prevents the McCanns from soliciting their former Ameriprise clients and from using Ameriprise’s confidential information, and required them to return any confidential records to Ameriprise and provide a list of those who received a mass email from the advisors around April 15.
“Mitchell’s and Wesley’s pre- and post-termination behavior has been rife with misconduct and transgressions, supported, and encouraged by LPL,” Ameriprise alleged in the complaint, contending the McCanns have violated their contractual agreements with Ameriprise as well as the broker protocol governing use of client information when advisors switch firms.
Broker-dealer Ameriprise also alleges the father-son advisory team, which operates Guardian Partners Wealth Management in Bloomfield Hills, Michigan, violated the law by soliciting and taking confidential information related to their former clients.
Among other allegations, Ameriprise contends the McCanns, before resigning, “preemptively violated the protocol, their duties of loyalty to Ameriprise and their agreements,” by pre-announcing their planned transition to clients, pre-soliciting clients and taking confidential documents and information.
“Leading up to their resignation on April 22, 2024, Mitchell and Wesley conducted an irregular number of print jobs and printed a total of 687 pages of documents containing specific letterhead and confidential information such as client information, names, account numbers and routing numbers,” the complaint says.
They also sent themselves 14 emails containing such information, according to the complaint, filed in U.S. District Court in eastern Michigan.
“In the days leading up their resignation, in the dark of night, after business hours, and on weekends, Mitchell and Wesley took boxes of confidential documents and information out of Ameriprise to misappropriate the material both before and after their transition to LPL,” the complaint contends.
A Client Complains
Ameriprise contends it didn’t become aware of the alleged the McCann’s resigned. On May 9, a week after LPL announced the McCanns had joined its broker-dealer, RIA and custodial platforms, Ameriprise received a formal written complaint from a customer about receiving copies of her confidential information and unredacted Social Security number from the McCanns, the complaint says.
“When the customer spoke with Mitchell and questioned why she was receiving this personal information, Mitchell stated he had all this confidential information for all the clients and all the clients were sent the same exact materials,” it states.
The McCanns are engaging in misconduct with LPL’s knowledge and support, according to the complaint, which contends LPL’s regular pattern and practice “is to encourage recruits to violate their contractual agreements.”
Ameriprise sought immediate injunctive relief — a temporary restraining order, preliminary injunction and expedited discovery — barring LPL and the McCanns from soliciting Ameriprise clients and from further using Ameriprise’s confidential and proprietary information, and compelling them to return this information.
The firm sought this action pending resolution of Ameriprise’s claims against the defendants in the related FINRA arbitration that Ameriprise commenced. FINRA has sanctioned advisors and firms for the same conduct that occurred here, Ameriprise contends.
