Ameriprise vs. LPL Financial
Ameriprise has accused LPL Financial of unfair business practices, alleging that LPL Financial engaged in a pattern of recruiting brokers from Ameriprise and encouraging them to remove confidential LPL client information before they make their final departure. It is common for brokerage firms to recruit from rival firms, but there are strict rules about what client information, if any, brokers are allowed to take with them to a new firm.
In an email to Reuters, a representative for LPL Financial stated that the Ameriprise lawsuit is simply meant to intimidate brokers who may consider leaving Ameriprise to work for LPL Financial. The LPL representative also referred to the Ameriprise lawsuit as “frivolous.” Ameriprise and LPL Financial regularly recruit brokers from each other, adding to the competitive tension between the firms.
Broker Protocol
Both firms are members of the Broker Protocol, meaning they have agreed to allow representatives to take a limited amount of information with them when they depart for a new firm. The Protocol is meant to reduce the amount of costly litigation that used to be commonplace when a broker went to work for a new firm.
As this case reveals, however, the Protocol does not always stop brokerage firms from suing over client information.
Client Information and the Broker Protocol
Under the Broker Protocol, departing brokers are limited to taking the following client information with them:
- Names
- Mailing Addresses
- Email Addresses
- Phone Numbers
- Formal Client Account Title
When brokers resign, they are supposed to submit a list of clients they intend to solicit once they have begun work with their new brokerage firms. Brokers are not supposed to tell their clients they are departing and should only ask them to transfer their assets once they have transitioned to their new roles. It is up to the investor if they wish to continue working with their broker or financial advisor at the new firm.
Trade Secrets and Confidential Client Information
The lawsuit alleges that LPL Financial is encouraging brokers to help the firm steal trade secrets from Ameriprise as well as “sensitive client data,” according to Financial Advisor.
Financial Advisor reports that the lawsuit specifically alleges that a father-son advisory team in Michigan removed “bankers boxes full of confidential documents off of the Ameriprise premises immediately prior to their transition.” These confidential documents allegedly contained client social security numbers, account numbers, and routing numbers for 6,000 customers and prospective customers. Certain emails also allegedly included investment strategies and five-year plans for clients, according to AdvisorHub. Ameriprise did win a temporary restraining order to prevent those former brokers from soliciting Ameriprise clients.
Client Privacy and Regulation S-P
The Broker Protocol is not the only regulation that aims to protect investors’ information. Regulation S-P requires firms to safeguard their clients’ information and to disclose to their investors if they intend to provide their information to a third party, giving customers the chance to opt-out.
What Should I Do if I Believe My Broker Stole My Information?
You do not have to continue working with a broker once they move to a new firm. If they attempt to transfer your assets without your authorization or mishandle your confidential information, you may have a case for a securities attorney. Our attorneys provide free evaluations – contact (877) 600-0098 or info@kurtalawfirm.com for more information.