Advisors at the center of the ongoing legal battle between Ameriprise and LPL Financial are asking a federal court to stay the lawsuit while FINRA arbitration proceeds.
Ten advisors at the heart of Ameriprise’s FINRA arbitration proceedings who left that firm for LPL argued in a motion filed this week that they were not party to an agreement between the two companies allowing their personal devices to be searched for evidence of client information (the advisors’ names were redacted in the document).
“The intervening advisors are caught between two corporate behemoths engaged in a massive and multi-front recruiting battle,” the motion reads. “Unfortunately, as a result, they risk the invasion of their privacy and the trampling of their rights.”
However, Ameriprise argued that the advisors were “completely mischaracterizing” the forensic review of their devices, with a spokesperson arguing it was done to protect client data.
“These advisors should look to LPL for putting them in this situation due to their unlawful recruiting practices,” an Ameriprise spokesperson said.
The motion is the latest development in a legal tug-of-war between the two firms. Ameriprise continues to submit restraining order requests that attempt to prevent advisors joining LPL from allegedly soliciting former clients. Meanwhile, LPL has claimed that Ameriprise is filing frivolous lawsuits and “chasing headlines.”
The scuffle between the firms got more heated last month when LPL argued Ameriprise had “sunk to a new low” by sending out “misleading” data breach notifications to frighten LPL customers.
Ameriprise responded that the firm needed to send data breach letters to customers whose personal information had allegedly been exposed by former Ameriprise advisors who’d moved to LPL.
In this ongoing suit, Ameriprise accused advisors who left the firm of illegally retaining 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 investigate the claim, including potentially searching advisors’ devices.
According to the latest motion, this left those unnamed advisors caught in the crossfire, as they hadn’t agreed to such a search. They claimed they had not taken any client information they were not allowed to, and took that information with Ameriprise’s consent.
“In other words, Ameriprise and LPL agreed—without giving notice to the advisors or providing them with any form of say—that the advisors’ own personal property would be subject ot a forensic review and information that the advisors contend they have a legal right to possess would be deleted,” the motion read.
Additionally, the advisors noted that Ameriprise only pursued arbitration against them after the court order mandating their personal devices be analyzed. The advisors believed Ameriprise wanted to obtain information through that search for the upcoming arbitration process.
“The advisors are being asked not only to hand over their personal property and to countenance an invasion of their privacy, but also to essentially permit Ameriprise an end-run around the arbitration process (including by obtaining intrusive and free-ranging discovery outside of arbitration),” the motion read.
According to a memorandum by an attorney representing the advisors, Ameriprise opposed the advisors’ motion to intervene, while LPL did not oppose the filing. LPL declined to comment prior to publication.
According to Ameriprise spokesperson Ali Mueller, LPL agreed to the order to search the advisors’ phones and has “the contractual obligation to force the advisors to comply.”
“LPL knew full well the advisors’ personal devices would be subject to forensic review when it agreed to the order,” she said.
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