LPL Financial and Ameriprise Financial have reached a significant agreement regarding customer data in their ongoing legal dispute over recruiting practices. Ameriprise has alleged that LPL’s actions crossed ethical and legal boundaries.
The agreement, detailed in a stipulated order signed by a federal judge on December 12, creates a framework for identifying and resolving data-related concerns. Specifically, it addresses data Ameriprise claims LPL possesses but should not retain. As part of the agreement, the judge denied Ameriprise’s previous request for an injunction against LPL, deeming it moot in light of the resolution.
This development is the latest chapter in a contentious legal battle that began in July when Ameriprise filed a federal lawsuit accusing LPL of improperly encouraging financial advisors to take confidential client and company data when transitioning from Ameriprise to LPL. LPL, however, has denied these allegations, dismissing the lawsuit as a “public relations stunt.”
The case underscores a rare public clash over recruiting tactics between two of the largest wealth management firms in the U.S. Collectively, Ameriprise and LPL oversee approximately 30,000 financial advisors and manage close to $3 trillion in client assets. Additionally, Ameriprise has filed a related arbitration case with the Financial Industry Regulatory Authority (FINRA), which remains ongoing, according to court filings.
Ameriprise expressed satisfaction with the court order, viewing the agreement as a victory for both clients and the industry. “We will continue to pursue our case on its merits in the ongoing FINRA arbitration given the strength of the facts,” an Ameriprise representative stated.
Similarly, LPL welcomed the opportunity to move forward with arbitration. “Our focus remains on supporting advisors who value independence and providing high-quality wealth management services to their clients,” an LPL representative said.
Under the stipulated order, LPL has agreed to review its systems to identify any data belonging to Ameriprise clients who did not transition to LPL. Any such data will be deleted. Additionally, the firms will share the cost of hiring a third-party forensic examiner to oversee the process, as outlined in the order filed in federal court in San Diego.
The forensic examiner will also investigate whether advisors used LPL’s bulk upload tool, which allowed for mass data uploads, to transfer client information. If such transfers are identified, LPL will provide details to the examiner. Furthermore, if any advisor is found to have retained client data after leaving Ameriprise, the examiner may review the advisor’s personal devices, with their attorney present, to create and share data copies with both firms and permanently delete unauthorized client data from the devices.
Ameriprise’s original lawsuit sought an injunction to stop what it described as LPL’s “ongoing misappropriation” of data while the arbitration case progressed. In court documents, Ameriprise argued that LPL’s actions disregarded client privacy rights and exposed advisors to potential regulatory and criminal consequences.
According to an October court filing, Ameriprise alleged that LPL and about 30 former Ameriprise advisors had access to confidential information related to over 4,500 Ameriprise clients. These accounts reportedly represented $1 billion in assets and generated $16 million in annual revenue.
In its defense, LPL countered that it had not used the bulk upload tool for years. The firm argued that granting Ameriprise’s request for an injunction would restrict advisors’ ability to move between firms and limit clients’ freedom to choose their preferred financial advisors.
As the arbitration case continues, this agreement marks a pivotal moment in the dispute, with both companies emphasizing their commitment to resolving the matter in a manner that prioritizes client privacy and industry integrity.
