For nearly four years, LPL helped at least 30 former Ameriprise advisors use an internal system to upload information for thousands of their ex-clients before that practice was abandoned in early 2022.
That’s according to testimony from an LPL executive this week in her firm’s ongoing recruiting dispute with its independent broker-dealer rival Ameriprise. In a legal declaration filed Thursday in federal court for the southern district of California, LPL vice president of business transitions Candi Sinquimani provided a list of 30 advisors who used what’s known at LPL as a “bulk upload tool” to import client information for more than 4,500 clients they had worked with while at Ameriprise.
Sinquimani said the data transferred went beyond the limits set by an industry-spanning pact known as the Broker Protocol. The protocol, which both LPL and Ameriprise belong to, explicitly allows departing advisors to take only client names, addresses, phone numbers, email addresses and account titles to their new firms.
READ MORE:LPL calls Ameriprise recruiting suit ‘public relations stunt’Ameriprise seeks preliminary injunction in ‘unprecedented’ LPL suitAmeriprise suit accuses LPL of ‘harvesting’ confidential client dataLPL rips Ameriprise for trying to intimidate departing advisorsAmeriprise sues ex-advisor for soliciting inherited clients to LPL
Ameriprise’s initial complaint against LPL, filed in July, accused its rival of a “widespread pattern and practice of harvesting and misappropriating Ameriprise’s private, confidential client information and trade secrets.” Among other things, it asks for the California federal district court to impose a preliminary injunction requiring LPL to cease certain recruiting practices and return customer data.
Sinquimani said LPL’s bulk upload tool was used with former Ameriprise advisors between the beginning of 2018 and end of 2021. The practice was halted the following year.
“To my knowledge, and consistent with LPL’s company practice, as of January 1, 2022, LPL has not provided the bulk upload tool or any similar tool to any Ameriprise recruit for the purpose of compiling information beyond that of the broker protocol,” Sinquimani said.
In the public filing of Sinquimani’s declaration, the names are blacked out for all 30 advisors she said imported information for former Ameriprise clients. But Ameriprise’s lawyers provide a few more details in accompanying legal documents.
According to Ameriprise’s chief legal counsel — Michael Taafe of Shumaker, Loop & Kendrick — Sinquimani’s list names 30 advisors who worked with “4,500 Ameriprise customers whose accounts generated over $16 million in annual revenues for Ameriprise and over $1 billion in assets under management.”
“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,” Taafe added.
Spokespersons for neither LPL nor Ameriprise responded to requests for comment.
Broker Protocol as a floor or ceiling
Ameriprise’s filing comes a week after LPL submitted its own response to the initial complaint in the recruiting dispute. In a motion last week, LPL called Amerirprise’s legal challenge “a public relations stunt masquerading as a lawsuit” and said success for Ameriprise would have a chilling effect on independent advisors’ long-cherished ability to change firms.
LPL’s filing contended that independent broker-dealers have generally viewed the broker protocol as a “floor,” setting a minimum for what sorts of information departing advisors can transfer to new firms. Ameriprise, LPL contended, is trying to treat the protocol like a “ceiling,” setting an uppermost limit on what’s fair game to take.
LPL said it first became aware of Ameriprise’s position on the broker protocol in a 2021 Financial Industry Regulatory Authority arbitration hearing over a separate recruiting dispute. But Ameriprise’s lawyer, Taafe, said in the response brief filed Thursday that it was only during those arbitration proceedings — over the departure of the former Ameriprise advisor Alan Kodama — that Ameriprise first gained an inkling of how much client information was being taken out the door.
“In fact, Ameriprise only uncovered LPL’s mass violations and misappropriation in June 2024, through discovery and investigation resulting from testimony in that Kodama matter,” Taafe wrote.
Taafe said that even though LPL supposedly stopped using its bulk upload tool with former Ameriprise advisors in early 2022, Ameriprise has yet to secure the return of client data taken before then.
“This alone entitles Ameriprise to injunctive relief, as LPL has no entitlement to the information it obtained via the bulk upload tool,” he wrote.
The free market?
LPL portrayed itself in its filing a week ago as a defender of a system that lets independent advisors who’ve worked hard to build a book of business easily affiliate with the firm of their choosing. But Taafe argued advisors’ freedom to move their practices where they want shouldn’t extend to confidential client information.
“LPL misses the point,” he wrote. “It harps on about how these businesses exist in a free market, but it neglects to address the fact that misappropriation has no place in a free market.”
The next hearing on Amerirprise’s request for a preliminary injunction is scheduled for Oct. 31.
