Ameriprise gets another restraining order in recruiting spats with LPL

Ameriprise has won another temporary restraining order in a series of disputes over its industry rival LPL Financial's recruitment practices.

Judge Barbara Rothstein in federal court in Seattle issued a restraining order Friday barring LPL and a recently recruited advisor, Douglas Kenoyer, from reaching out to Kenoyer's former clients at Ameriprise. LPL and Kenoyer are also required to return any trade secrets or other proprietary information they may have taken from Ameriprise, although they are allowed to keep data for already-transferred clients.

The dispute arises from Kenoyer's decision on Sept. 19 to depart Ameriprise for LPL. Ameriprise contends that Kenoyer, an 18-year registered representative of the firm, bought most of the book of business he was managing in 2019 from an Ameriprise colleague who was then planning to retire.

As a condition of that purchase, Kenoyer agreed to not solicit the clients for a year after leaving Ameriprise should he choose to leave. But Kenoyer, according to LPL, began reaching out to them even before departing.

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Rothstein found that Kenoyer most likely violated not only the terms of the internal transfer agreement but also those of the Broker Protocol. The protocol, an industry-spanning pact that both Ameriprise and LPL belong to, is meant to provide legal protection to departing advisors, providing they only take with them clients' names, addresses, phone numbers, email addresses and account titles.

Rothstein said the protocol allows advisors who've left one firm for another to reach out to former clients — but only after they've started their new jobs.

"There is no dispute that Kenoyer solicited at least some of the clients he served, while still affiliated with Ameriprise," she wrote.

A spokesperson for Ameriprise said Kenoyer's actions "were in clear violation of the protocol for broker recruiting as well as industry standards."

"This case is yet another example of LPL blatantly disregarding the industry's recruiting protocol, putting advisors and clients at risk," the spokesperson added.

LPL had no comment. 

Rothstein's temporary restraining order comes amid a much larger dispute over LPL's recruiting practices. Ameriprise filed a wide-ranging suit in federal court in Minneapolis in late July accusing LPL of a "widespread pattern and practice of harvesting and misappropriating Ameriprise's private, confidential client information and trade secrets."

In the latest development in that suit, an LPL executive testified that 30 former Ameriprise advisors had used a system LPL calls a "bulk upload tool" to import data for more than 4,500 clients over four years starting in 2018. Ameriprise has previously alleged the types of information being taken included social security numbers, account numbers, account information, routing numbers, client dates of birth, client ID numbers and account values. 

That suit questioning LPL's general recruiting methods came roughly a month after Ameriprise won a restraining order against two other recently departed advisors. In a legal action filed on June 4, Ameriprise accused Mitchell and Wesley McCann, a father-son duo operating the Detroit suburb of Bloomfield Hills, Michigan, of making off with confidential documents "in the dark of night, after business hours, and on weekends" in the weeks and days preceding their departure in late April.  

As with the McCanns, Rothstein's granting of a temporary restraining order in the Kenoyer case means his dispute now will most likely be settled by a Financial Industry Regulatory Authority arbitration panel. Ameriprise said in its initial complaint that it had already filed a claim with FINRA.

Rothstein noted in her order on Friday that Kenoyer had at one point told his direct supervisor at Ameriprise, Vice President David Call, that he was unhappy at the firm and thinking of moving elsewhere. Kenoyer said he also informed Call that he was making his dissatisfaction known to some of his clients.

Crucially, though, Call testified that Kenoyer never told him of any intention to start soliciting customers for LPL even before he had left Ameriprise.

"While Call admits that he 'was aware of Kenoyer's general dissatisfaction with his

relationship with Ameriprise' he avers that he 'did not learn of his pre-solicitation until immediately prior to Kenoyer submitting his Notice of Resignation,' and that 'Kenoyer's claim he informed me that he was pre-soliciting Ameriprise's clients is false,'" according to the ruling.