LPL Financial claims Ameriprise “has sunk to a new low” by sending out allegedly “misleading” notifications about a data breach, which the firm says is an attempt to frighten LPL customers and hurt its business. Ameriprise claims it is trying to protect investors’ data.
LPL filed a request for a restraining order in California federal court Monday, claiming that Ameriprise “lied to thousands of customers – including LPL account holders” to defame LPL and give Ameriprise an advantage in the clashes between the firms playing out in courtrooms nationwide.
According to LPL, the data breach notification claimed client data was endangered when certain advisors left Ameriprise for LPL years ago. An LPL spokesperson countered that the notification misrepresented “routine account transitions.”
“This is a blatant and desperate attempt to instill fear and distrust in these investors and tarnish the reputation of their advisors,” the LPL spokesperson claimed. “It is time for Ameriprise to stop engaging in tactics that harm both small business owners and the clients they serve.”
But Ameriprise is striking back, arguing they were within their rights to inform customers of what they claim was a data breach caused by advisors leaving for LPL.
“Once again, LPL is trying to shift the narrative away from its misconduct instead of focusing on what matters most—protecting clients and their sensitive data,” an Ameriprise spokesperson said.
LPL and Ameriprise have continuously battled in the courts during the past year, with Ameriprise continuing to seek temporary restraining orders to prevent advisors departing for LPL from soliciting clients while LPL has argued that the firm is filing frivolous lawsuits and is “chasing headlines.” Most recently, Ameriprise accused one of its former reps of defying a court order by continuing to solicit clients after leaving for LPL.
According to LPL’s suit, both LPL and Ameriprise had long adhered to standard rules in the IBD space, in which advisors were free to move between firms while retaining some customer information.
Starting in 2021, Ameriprise began suing its departed advisors and told LPL that its advisors could not retain customers’ information, according to LPL, who allegedly told incoming Ameriprise advisors they could only take information allowed by the Protocol for Broker Recruiting.
Last July, Ameriprise sued LPL, claiming advisors who left the firm may have retained clients’ personal information on personal devices when they joined LPL. In an order from the court, both firms agreed to retain a “forensic examiner” to assess whether this had happened.
In December, Ameriprise sued 30 advisors who’d left for LPL between 2018 and 2021 in FINRA arbitration. LPL claimed Ameriprise now wants those advisors to “turn over” every device they’ve used since leaving Ameriprise and allow access to personal emails and cloud storage.
“It has further insisted every one of these devices must undergo full forensic imaging,” the order read. “This is far beyond what the Order contemplates or what LPL agreed to do and represents a far-reaching and unnecessary intrusion of the Advisors’ privacy.”
LPL purportedly understood that Ameriprise might notify customers about its data policies after receiving data on former Ameriprise customers in the wake of the court order mandating a forensic examiner. Still, LPL claimed Ameriprise lied, opting to “tarnish LPL” and the advisors who left to their clients.
On April 8, Ameriprise informed LPL it had sent a notification letter to customers (while omitting their identities), informing clients that their former advisors (who left Ameriprise for LPL) had “shared certain confidential personal information…that exceeded the limited scope of information” they could use when changing firms.
However, LPL argued that clients who moved to LPL with their advisor from Ameriprise “necessarily consented” to the advisor having such information.
“This statement is knowingly false and defamatory. Advisors’ retention of their customers’ information was not a ‘data breach or an ‘incident,’ nor was it ‘unauthorized,’” LPL claimed.
LPL also criticized Ameriprise’s “specific and unnecessary” reference to LPL in the notice, but an Ameriprise spokesperson said the firm was duty-bound to inform clients of the alleged breach.
“Let’s be clear—the steps we took to inform impacted individuals their data had been compromised were completely lawful and contemplated by a federal court order to which LPL agreed,” the spokesperson said.
However, LPL now says that Ameriprise still refuses to tell them which LPL clients have been contacted via this notice, which allegedly puts LPL in the position of proactively reaching out to all its customers (provoking further panic) or waiting for agitated clients to contact them.
“At this very moment, unidentified customers are receiving false and misleading letters claiming their ‘data’ has been ‘breached,’” the suit reads. “Without information regarding who received this letter, LPL cannot feasibly reach out to the affected account holders to assure them that their information is – and has always been – safe and secure.”
LPL wants the court to demand Ameriprise tell them the names of the clients who received the notice and halt further communications with them. LPL claimed that it would also continue fighting Ameriprise in FINRA arbitration and ask FINRA to investigate Ameriprise’s actions.