LPL Financial for years offered a tool that allowed at least 30 advisors recruited from Ameriprise Financial Services to upload confidential client information forbidden by an industry protocol, Ameriprise alleged in a court filing last week.
Ameriprise bases the contention at least partly on information that an LPL executive supplied in a recent declaration to the court.
LPL's "Bulk Upload Tool" improperly allowed the advisors, whose clients generated over $16 million in revenue for Ameriprise, to enter the client data on a spreadsheet, Ameriprise alleged in U.S. District Court for Southern California, where the company seeks a preliminary injunction against its rival pending an industry arbitration.
The broker protocol allows advisors switching firms to take only a customer's name, address, phone number, email address and account title when switching from one signatory firm to another.
"Those thirty registered representatives removed confidential information pertaining to over 4,500 Ameriprise customers and impermissibly brought that information to LPL for competitive use against Ameriprise without the Ameriprise clients' prior approval," Ameriprise executive Ross Palacios said in a declaration filed in court last week.
Palacios based his testimony on a court declaration provided earlier by LPL executive Candi Sinquimani, vice president in LPL's business transition department, who stated LPL previously used the bulk upload tool to allow advisors to provide data beyond protocol information.
LPL expected the recruits to upload only data that they, in consultation with outside counsel, deemed appropriate and in line with the advisors' obligations to their previous firms, according to Sinquimani. (An LPL spokesperson, responding to a request for comment Monday, pointed to this statement.)
LPL allowed certain advisors transitioning from Ameriprise to use the tool for about four years, from Jan. 1, 2018, to Dec. 31, 2021, but stopped after Ameriprise contended in a Financial Industry Regulatory Authority arbitration that its advisors are subject to the protocol, Sinquimani declared to the court.
She also said the LPL transition team doesn't tell recruits what customer information to bring with them from their old firms but does pay for them to consult with outside attorneys on such matters.
LPL, which faces multiple court actions or FINRA arbitrations over its recruiting practices involving former Ameriprise advisors, has panned the California case as a public relations stunt.
Ameriprise's Palacios told the court "LPL has engaged in a pattern and practice of misappropriating Ameriprise confidential information," with recruits having taken Social Security numbers; account numbers, values and information; routing numbers; and other data that the protocol prohibits.
Ameriprise has never received confirmation that LPL has stopped using or purged the data, and has seen cases this year indicating its rival continues to misappropriate trade secrets and client information, Palacios alleged in his court declaration.
Ameriprise's attorney contends in a filing containing Palacios' declaration that "LPL makes no effort to dispel Ameriprise or this Court of the reality that LPL is still in possession of, and using, the ill-gotten confidential information which it acquired through this scheme."
