Ameriprise Financial Services said Tuesday that it is suing LPL Financial for engaging in "a widespread pattern and practice of harvesting and misusing private, confidential client information" as LPL recruits advisors.
"The pattern of behavior conducted by LPL is both shocking and concerning," said Michael Taaffe, partner at Shumaker, Loop & Kendrick LLP and outside counsel for Ameriprise, in a statement about the suit, filed in U.S. District Court for the Southern District of California.
The lawsuit alleges that LPL "systematically directs the advisors it recruits from Ameriprise and its competitors to take confidential information on their way out the door," in direct violation of multiple securities laws and regulations, as well as the standards LPL is legally bound to follow as a member of the broker protocol for recruiting.
The suit adds that LPL's conduct "abandons all reasonable notions of client privacy rights and subjects the advisors it recruits to regulatory, and in some cases even criminal, exposure."
LPL. in a statement shared with ThinkAdvisor via email, said it strongly disagrees: "Ameriprise's actions are part of an ongoing effort to hinder competition in the financial services space and intimidate its advisors who might consider leaving to join another firm.
"As a steward of independence in our industry, LPL will vigorously defend itself against these claims and all of Ameriprise's equally frivolous cases," LPL added.
