Ameriprise Financial Sues LPL Financial Over Data Misuse and Recruitment Practices

1 min read | July 31, 2024 12:00 AM PDT | By Team Kalkine Media

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Ameriprise Financial Sues LPL Financial Over Data Misuse and Recruitment Practices — Image source: shutterstock.com

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Ameriprise Financial Services, Inc. (AMP) has initiated a lawsuit against LPL Financial Holdings Inc. (NASDAQ:LPLA) and its subsidiary, LPL Financial LLC, in the U.S. District Court. The complaint accuses LPLA of malpractice, mishandling confidential client data, and improperly recruiting advisors, alleging violations of legal and regulatory standards.

Key Points:

Allegations of Data Misuse: Ameriprise claims that LPLA has been directing advisors it recruits to take confidential information from their previous employers, which breaches several securities laws and industry protocols.

Legal Actions and Requests: Ameriprise seeks an injunction to prevent LPLA from using the illicitly obtained data and requests the return of this data. They also propose appointing a third-party forensic analyst to oversee the data's removal from LPLA’s systems.

Counterclaims and Industry Context: LPLA contends that Ameriprise's lawsuit is a tactic to eliminate competition and deter its advisors. The financial services sector has seen similar legal issues recently, with Citigroup and Mitsubishi UFJ Financial Group facing penalties for data management and client confidentiality violations.

In addition to the court case, Ameriprise has sought arbitration through the Financial Industry Regulatory Authority (FINRA), and has requested a temporary restraining order to stop LPLA from misusing the client data.

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