Ameriprise’s grievances over LPL Financial’s recruiting tactics spilled out into federal court again this week with another suit against a departing advisor.
Ameriprise filed a lawsuit in Seattle on Monday accusing its industry rival of running afoul of industry standards and federal law in its recruitment of Douglas Kenoyer, who had been with the firm for 18 years starting in 2006. The legal action lobs many of the allegations Ameriprise made in a legal challenge filed in July accusing LPL of systematically “harvesting and misappropriating Ameriprise’s private, confidential client information and trade secrets.”
In its latest suit, Ameriprise alleges Kenoyer and LPL violated the terms of an internal client transfer agreement that let him inherit clients from an advisor who was planning to retire soon. The transfer provided Kenoyer with a book of business consisting of 1,031 new clients and nearly $134 million in assets under management, according to Ameriprise.
As a condition of the agreement, Kenoyer agreed to not solicit the clients for a year after leaving Ameriprise should he choose to depart. But Kenoyer, according to the suit, began reaching out to them even before exiting on Sept. 19 to join LPL.
“Upon his resignation from Ameriprise, Kenoyer serviced just 583 clients and $144,674,511 in assets under management, meaning the vast majority of his book of business was acquired via and is restricted by this internal client transfer,” according to the suit.
“Mr. Kenoyer blatantly breached the protocol for broker recruiting, misappropriated sensitive client data and stole trade secrets. We look forward to presenting our evidence and proving our claims in court,” an Ameriprise spokesperson said.
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LPL did not immediately return a request for comment. In previous recruiting disputes with Ameriprise, the firm has said, “Ameriprise’s actions are part of an ongoing effort to hinder competition in the financial-services space and intimidate its advisors who might consider leaving to join another firm.”
As in previous lawsuits, this latest one filed by Ameriprise also accuses LPL of violating the Broker Protocol. This industry-spanning pact sets restrictions on what types of information advisors can legally take with them when they move from one firm to another, limiting it to client names, addresses, phone numbers, e-mail addresses and account titles.
Ameriprise’s suit says the protocol applies only after an advisor has joined a new firmd an that Kenoyer violated it by soliciting his clients even before he had left.
“Unfortunately, it appears Kenoyer’s improper pre-solicitation and solicitation efforts have proved successful, as numerous Ameriprise clients have already transferred their accounts to Kenoyer at LPL,” according to the suit.
Ameriprise also accuses Kenoyer of breach of contract and breach of fiduciary duty and accuses Kenoyer and LPL of unjust enrichment, unfair competition, misappropriation of trade secrets and tortious interference, among other violations.
Similar to recent recruiting quarrels, Ameriprise is asking the court to impose a temporary restraining order and preliminary injunction barring Kenoyer and LPL from further soliciting clients. Ameriprise said in its suit that it has separately filed a claim with the Financial Industry Regulatory Authority seeking a resolution to the dispute before one of its arbitration panels.
Other recent recruiting cases between Ameriprise and LPL have resulted in a temporary restraining order pending resolution by a FINRA arbitration panel. In June, for instance, a TRO was granted in a dispute between Ameriprise and a pair of advisors in the Detroit suburb of Bloomfield Hills who had left earlier in the year for LPL.
