Ameriprise is accusing LPL Financial (and a broker who left Ameriprise for the independent broker/dealer) of defying a court order by continuing to solicit Ameriprise clients.
On Friday, Ameriprise asked a Washington state federal judge to demand that LPL and Douglas Kenoyer (who left Ameriprise for LPL last year) show “cause” they shouldn’t be held in civil contempt for breaking a temporary restraining order purportedly stopping Kenoyer from reaching out to former Ameriprise clients (while allegedly using confidential Ameriprise information).
Additionally, Ameriprise accused LPL of failing to ensure that its new broker followed the constraints of the restraining order, claiming Kenoyer continued to solicit Ameriprise clients in a “natural and wholly predictable result.”
“This conduct is based on the pattern we’ve seen of LPL wrongfully taking sensitive client information and trade secrets,” an Ameriprise spokesperson said in a statement about the Friday filing.
At that time, the Spokane, Wash.-based Kenoyer worked with 583 clients with more than $144 million in managed assets (most of which came from another former Ameriprise advisor, the firm alleged). Ameriprise believed Kenoyer began illegally soliciting clients months before he changed firms, accusing him of taking confidential information, and said LPL knew (or should have known).
But Ameriprise offered no evidence of LPL being involved, according to the latter firm, which accused Ameriprise of trying to “stamp out competition from LPL and abusing the courts” to stop competing firms from poaching any of its employees.
Kenoyer noted that Ameriprise had filed six cases or arbitrations against advisors who’d left for LPL, calling the suit against him the “latest salvo in an economic war.” But on Oct. 25, a federal judge agreed to Ameriprise’s request for a temporary restraining order, finding that Ameriprise had demonstrated “a likelihood of success on the merits of its breach-of-contract claim.”
However, Ameriprise believes that Kenoyer continued to solicit clients from his former employer even after the restraining order was issued and that LPL was in the midst of a “brazen refusal” to follow the court’s order.
According to the firm’s latest motion, Kenoyer revealed during an injunction hearing in FINRA arbitration that he was still soliciting Ameriprise clients after the court order, including the realization that the assets he’d brought from LPL had climbed from $40 million to $57 million between December and late January. According to Ameriprise, Kenoyer admitted he’d recontacted Ameriprise clients who were not his to entice them to move to LPL.
“Indeed … Kenoyer apparently continued to solicit clients based upon whether they had allegedly previously ‘expressed their intent’ that they wanted to transfer to LPL, though Defendant Kenoyer unsurprisingly has no documentation to support that alleged and amorphous concept of ‘intent,’” the Amerirprise motion read.
LPL declined to comment on the latest court development.
Ameriprise and LPL are locked in legal conflicts in several federal districts throughout the country, with each firm emerging victorious in different locales.
While Ameriprise attained a TRO in Washington federal court against LPL and Kenoyer, an Arizona federal judge shot down Ameriprise’s attempt to get a similar order against LPL and former reps Jared Roskelley, Kyle Robertson and Matthew Tinyo.
Ameriprise filed suit in late January, alleging the three departing reps solicited former clients and stole confidential information, printing nearly 9,000 documents over several days before they left. The reps countered that the printed pages were part of physical mailings sent to clients in a longstanding practice predating their employment with Ameriprise and that their branch manager had authorized them to do so.
U.S. District Judge Susan Brnovich denied the restraining late last month, writing that Ameriprise’s arguments were “insufficient to show success on the merits” when it came to the claims against LPL and that the plaintiff had ‘failed to elevate its allegations beyond mere speculation.”
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