A federal judge in Arizona has issued a ruling against Ameriprise in its ongoing recruiting battle with rival broker LPL Financial, Wealth Management reports.
U.S. District Judge Susan Brnovich denied Ameriprise’s request for a temporary restraining order against three former advisors who left for LPL Financial. Ameriprise contended that the three took confidential client information with them when they departed and improperly solicited former clients.
In her ruling, Brnovich stated that the arguments by Ameriprise were “insufficient to show success on the merits of the claims against LPL,” adding that, “Ameriprise fails to establish that its clients’ information is actually a trade secret,” the ruling read.
The case stemmed from the departures of Jared Roskelley, Kyle Robertson and Matthew Tinyo, who resigned to join LPL. Ameriprise filed a lawsuit several weeks later, claiming the representatives had violated the Protocol for Broker Recruiting with LPL’s urging and support. The agreement clarifies information advisors can take when changing jobs; both firms are signatories. LPL responded that Ameriprise was “chasing headlines” by trying to smear the firm and its new hires.
Brnovich sided with the three brokers in finding that Ameriprise failed to prove that they violated their employment agreements and the Protocol for Broker Recruiting. She said Ameriprise made only “speculative” arguments that Roskelley, Robertson and Tinyo had an “ulterior motive” in printing large quantities of client documents before their move, according to the order. Ameriprise had claimed that the brokers printed more than 8,800 pages of client documents to solicit customers following their departure.
The brokers said that the client documents pertained to quarterly reports that they routinely mail to clients as many of their elderly customers prefer paper copies of their information.
Brnovich stated that since the brokers did not keep any of the printed client documents and additionally attested to only retaining information allowed under the Protocol, Ameriprise could not show they had breached their employment agreements or the Protocol, which allows brokers to solicit clients when moving among signatory firms.
The judge’s order also stated that Ameriprise additionally made “no factual allegations” that LPL “actually encouraged” the brokers to violate their employment agreements or “improperly retain client information.”
Responding to the ruling, Ameriprise said the decision acknowledged the case was better suited for FINRA arbitrators. A firm spokesperson said it would “look forward to presenting the overwhelming evidence” in the case.
“Importantly, we’ve prevailed in several other cases pertaining to the egregious recruiting practices by LPL and its advisors that put clients’ privacy at risk—including a recent FINRA arbitration decision in our favor and several federal court decisions,” the spokesperson said. “We remain committed to protecting clients’ confidential information.”
An LPL spokesperson said the firm was “thrilled” by the decision.
“It is evident from the ruling that the court saw through the baseless claims brought by Ameriprise and that their attempts to strip independence from advisors by claiming ownership of their books were denied,” they said. “True independence prevailed here; we remain confident it will in future matters.”
Ameriprise has filed several lawsuits against LPL over its recruiting tactics and accused another former employee who left for LPL of illegally soliciting clients and taking client information.
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