Ameriprise sues LPL Financial over alleged misappropriation of client data

(Reuters) – Ameriprise Financial (NYSE:) said on Tuesday it has filed a lawsuit in a U.S. district court against LPL Financial (NASDAQ:), alleging it harvests and misuses confidential client information in violation of legal, regulatory and industry obligations.

In the lawsuit, Ameriprise alleged “LPL systematically directs the advisers it recruits from Ameriprise and its competitors to take confidential information on their way out the door”.

Ameriprise added that LPL’s alleged conduct is in direct violation of multiple securities laws.

LPL, an independent broker dealer and financial services firm, did not immediately respond to a request for comment.

Lawsuits alleging mishandling of trade secrets are common in the cut-throat financial services industry, especially if employees leave for competitors. Advisers are often very protective of data about their clients – such as details about investment portfolios and risk appetite.

Earlier this year, Jane Street Group sued its hedge fund rival Millennium Management, accusing it of stealing a valuable in-house trading strategy after two traders defected.

LPL serves 23,000 financial advisers at around 1,000 institutions and roughly 580 registered investment advisers firms nationwide, its latest earnings release showed.

The two firms have a history of hiring advisers from one another. In July, LPL added a pair of advisers from Ameriprise who reportedly managed around $475 million of assets.

In June, Ameriprise said a team with $105 million in assets returned to the company after 5 years at LPL.