Ameriprise accuses LPL of shady recruitment tactics
Ameriprise Financial is taking legal action against LPL Financial, accusing its rival firm of engaging in underhanded and potentially criminal recruiting practices that involve taking confidential client and company information.
The suit, lodged in the United States District Court in San Diego, claims LPL systematically directs advisors it recruits to take sensitive information from Ameriprise as they switch to LPL.
In a statement published Tuesday, Ameriprise alleged that LPL instructs new recruits to take confidential information as they defect from their former firms, effectively “[subjecting] the advisors it recruits to regulatory and criminal exposure.”
Other sources reporting on the lawsuit say it goes into further detail, claiming that LPL directed its new hires to take client social security numbers, account numbers, and other confidential data so as to solicit Ameriprise clients more effectively. In some cases, the suit claims the information is uploaded to unsecure networks, compromising client privacy.
The complaint highlights a pattern of behavior where LPL allegedly provides tools and instructions to recruits for scraping and transferring confidential information, in violation of industry standards and regulatory rules.
As per reporting by Barron’s, the lawsuit notes Ameriprise and LPL are both signatories to the Protocol for Broker Recruiting, which allows advisors to take basic client contact information when switching firms. However, Ameriprise maintains that LPL encourages advisors to retain information far beyond what the protocol permits.
“LPL encourages and instructs Ameriprise recruits to harvest confidential client information from Ameriprise’s systems to turn over to LPL shortly after affiliating
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