LPL and a recently recruited father-son advisory team are accusing Ameriprise of intimidation tactics meant to make other wealth managers think twice before leaving for other firms.
In a legal document filed earlier this month, LPL Financial questioned Ameriprise's decision to turn to the courts for a resolution of a dispute over LPL's recruitment of Mitchell and Wesley McCann. The father-and-son pair had formerly managed nearly $250 million for Ameriprise out of an office in the Detroit suburb of Bloomfield Hills, Michigan.
A suit Ameriprise filed on June 24 accused the McCanns 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. Ameriprise sought a restraining order enjoining both LPL and the McCanns from soliciting Ameriprise clients and requiring them to return any client information they might have taken.
Federal Judge Brandy McMillon, in the U.S. District Court in Detroit, agreed Monday to place a temporary restraining order on the McCanns but stopped short of doing the same with LPL. That ruling came days after LPL had contended in its own legal filing that the real forum for the dispute is before an arbitration panel overseen by the Financial Industry Regulatory Authority, the broker-dealer industry's self-regulator.
LPL said it has tried to work with Ameriprise on a resolution over the McCann's departure, only to be met with ever-increasing demands.
"Ameriprise's intransigence reveals this action for what it is: a truly cynical attempt on Ameriprise's part to intimidate other of its advisors who might consider leaving to join another firm, and hinder competition in the financial services space," according to LPL's response. "Rather than investing its time and resources into improving its business model such that accomplished advisors like the McCanns don't feel the need to take their business elsewhere, Ameriprise would rather continue its pattern of suing advisors who leave without any reasonable basis to think these advisors have done anything wrong."
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A spokesperson for Ameriprise said, "The facts of this case are clear. These advisors violated the protocol for broker recruiting among other industry standards and rules. We look forward to the judge's ruling on LPL's involvement in these violations."
'Case has no merit'
The McCann's lawyer, Scott Matasar of Matasar Jacobs in Cleveland, noted that his clients agreed to Ameriprise's restraining order voluntarily. They're more than happy to return anything they might have taken, Matasar said, because "this case has no merit."
"They are bringing this six weeks after the arbitration case was filed," he said. "This is strategic harassment and an attempt to drive up my clients' litigation costs."
Ameriprise's suit states that the firm has photographic evidence of the McCanns removing stacks and boxes of documents and papers in the weeks and days leading up to their departure. Many of the images were captured in the evening, after their office had closed.
Matasar said a close look at the stills, though, shows that the boxes they removed mostly contained personal effects like framed pictures, lamps and various sorts of "desk tchotchkes."
"That's why we so readily agreed to the [temporary restraining order], because they didn't do anything wrong," he said.
Thinking of leaving? Maybe think twice
Matasar said he is representing nearly a half dozen former Ameriprise advisors who are faced with legal challenges after leaving for other firms. He accused Ameriprise of using the courts to send a warning to other wealth managers who might be thinking of departing.
"Rather than making the necessary investments to improve the advisor experience at the firm, they would rather go and start retaliating against departing advisors and intimidating them into staying at Ameriprise," Matasar said. "Because, heaven forbid anyone would have the gall to look for another job."
Ameriprise's initial complaint against the McCanns states they together managed the money of nearly 322 households. The father-son team, according to the suit, produced more than $1.8 million in revenue over their past year at Ameriprise.
Since joining LPL, they've started a team called Guardian Partners Wealth Management specializing in helping clients plan for retirement.
"Partnering with LPL means freedom, and that's exactly what we were looking for," Mitchell McMcann said in a press release
Along with removing boxes full of confidential paperwork, Ameriprise's suit accuses the McCanns of printing out 687 pages of documents containing customer information such as names, account numbers and routing numbers. It also says the McCanns sent themselves 14 emails listing similar data and mass mailing letters to former clients.
Broker protocol
Both Ameriprise and LPL are members of the
Ameriprise alleges that the McCanns and LPL violated the broker protocol by reaching out to clients even before they had left and by taking documents not covered by its protections. Ameriprise also accuses the defendants of breach of contract, misappropriation of trade secrets, unjust enrichment, unfair competition and breach of fiduciary duties, among other misdeeds.
Despite the ostensible protections of the broker protocol, disputes over recruiting moves have remained common in the industry.
But such claims can prevail before FINRA arbitrators. Also in February 2023, a three-member arbitration panel
Richard Chen, a legal advocate for advisors and the founder of
"The brokers would be in compliance with the broker protocol as long as the departing brokers exercised good faith in assembling the information permitted to be taken and substantially complied with the requirement that only client information related to clients they serviced while at the firm be taken," he said.
Even amid signs that the broker protocol may be getting a little tattered around the edges, Matasar said he thinks it's largely serving its intended purpose. Matasar said he works on between 250 and 300 advisor transitions in any given year.
The vast majority, whether done under the protocol or not, "come off without a hitch," he said.
"This is a one-off situation that's being driven by a firm that is losing in the competition for advisors," he said. "This has much more to do with Ameriprise's business models and whatever problems there might be with that than with the broker protocol."
