Ameriprise Files Lawsuit Against LPL Financial for Alleged Client Data Misappropriation, Report Says

Ameriprise Financial Files Lawsuit Against LPL Financial Over Confidential Information

Ameriprise Financial announced on Tuesday that it has initiated legal proceedings in a U.S. district court against LPL Financial, claiming that the latter is unlawfully gathering and exploiting confidential client information, thereby violating various legal and regulatory obligations.

In its complaint, Ameriprise accused LPL of systematically instructing advisers it recruits from Ameriprise and other competitors to take confidential information when leaving their previous positions. The company contended that LPL’s actions breach multiple securities laws.

In response, LPL, an independent broker-dealer and financial services provider, labeled Ameriprise’s claims as an effort to stifle competition within the financial services sector and to intimidate its advisers contemplating a move to a different firm. LPL stated that it would vigorously defend itself against these allegations, describing Ameriprise’s case as equally frivolous.

Lawsuits regarding the mishandling of trade secrets are not uncommon in the highly competitive financial services industry, particularly when employees transition to rival firms. Advisers are typically highly protective of sensitive client data, which includes details about investment portfolios and risk tolerance.

Earlier this year, Jane Street Group also took legal action against its competitor, Millennium Management, accusing it of stealing a proprietary trading strategy after two traders left for Millennium.

Currently, LPL Financial supports approximately 23,000 advisers across around 1,000 institutions and about 580 registered investment adviser firms nationwide.

The rivalry between Ameriprise and LPL is not new, with both firms frequently hiring advisers from each other. Recently, in July, LPL recruited two advisers from Ameriprise who managed approximately $475 million in assets. Conversely, in June, Ameriprise reported that a team with $105 million in assets returned after spending five years with LPL.