LPL Agrees to Purge Data From Recruited Ameriprise Advisors

“Importantly, LPL has been called to account for violating multiple securities laws and regulations, as well as the industry standards for broker recruiting. We will continue to pursue our case on its merits in the ongoing FINRA arbitration given the strength of the facts,” Ameriprise said.

An LPL spokeswoman said in a statement: "While Ameriprise continues to run a campaign to cover their losses, our focus is on supporting the advisors who understand the value of independence and providing high quality wealth management services to the clients they serve. We are pleased to have this issue move forward to FINRA arbitration."

Among other points, the court order:

• Stated that the advisors and/or LPL retained nonpublic, personally identifiable information contained within the bulk upload tool related to clients who didn’t open accounts with LPL. FINRA will decide whether the advisors and LPL have the right to retain that data.
  
• Requires LPL to identify all these "non-customers" and customers whose information the advisors transferred to LPL via the bulk upload tool upon affiliation with LPL.
  
• Requires that if an advisor is found to have kept client and non-client data, the forensic examiner will review locations in the advisor’s personal devices or repositories and take steps to protect any sensitive personal data.
  
• Stated that the forensic examiner will permanently delete from advisors’ personal devices both client data and information for “non-customers” who didn’t open accounts at LPL.
  
• Requires LPL to review its own systems to determine whether it possesses any non-customer data. If the firm locates any such information, it must start a process to delete it, after retaining a forensic copy with all metadata intact for ongoing litigation or arbitration purposes, and in keeping with its regulatory obligations.
  
• Mandates that LPL provide to Ameriprise the bulk upload tools, with metadata intact, used by the relevant advisors so that Ameriprise can determine whether it must notify customers, including those who opened accounts at LPL.

Ameriprise argues in its complaint that the confidential information taken through the bulk upload tool violated an industry protocol, which allows advisors to take only a customer's name, address, phone number, email address and account title when switching from one signatory firm to another.

An Ameriprise executive, in a court declaration, said that the 30 advisors 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."

An LPL executive had told the court in a declaration that LPL expected its 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. This executive stated that LPL previously used the bulk upload tool to allow advisors to provide data beyond protocol information.

LPL has blasted Ameriprise's complaint as an unfounded "public relations stunt" meant "to chill further departures" to the firm's competitors.