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A judge overseeing the ongoing LPL Financial/Ameriprise legal battle ruled that the advisors at the center of the dispute, who left Ameriprise for LPL, don’t have to submit their personal devices to a “forensic review” for allegedly stolen client data.
In the order this week, Judge Jinsook Ohta wrote that arbitration hearings on the merits of the accusations about Ameriprise’s client data are scheduled for Oct. 6. As a result, she argued that while the court first agreed to a forensic search to “preserve the status quo” by isolating any information on the advisors’ devices and creating a forensic copy, the arbitration’s date in several months makes the point moot.
“The Court therefore no longer finds it equitable to impose a forensic review process—agreed to only by LPL and Ameriprise—on the financial advisors regarding their various electronic devices,” Ohta wrote, ordering that mandate for a “forensic review, imaging and deletion of disputed client information” from advisors’ personal devices be excised.
Ameriprise initially filed a lawsuit against LPL Financial in the summer of 2024, alleging that LPL directed recruits leaving Ameriprise for the IBD to take client information, subjecting them to “regulatory, and in some cases, even criminal exposure,” in a “widespread” misuse of client information. LPL responded by accusing Ameriprise of “remarkable hypocrisy,” while touting its support for advisors’ rights.
Ameriprise argued that the advisors who left should have their personal devices reviewed for allegedly stolen client data, and LPL and Ameriprise agreed to have a third-party forensic examiner investigate the claims.
However, some advisors objected, arguing they were never party to the agreements between the firms. LPL supported the advisors’ opposition, while Ameriprise claimed the advisors were coordinating with LPL to “either delay or disrupt” the agreement.
Ohta originally struck down the advisors’ attempt to intervene in the case to pause the data review, but the decision was overturned in a federal appeals court.
After the appeal, some advisors at the heart of the case called for Ohta to compel arbitration and stay the case, while LPL simultaneously submitted a motion to amend the stipulated order to remove the personal device search requirement (which Ameriprise opposed). With Ohta partially affirming LPL’s request this week, the judge ruled the other two motions as moot.
In the order, Ohta also noted that the arbitration proceedings had continued apace. When LPL and Ameriprise first agreed to the forensic searches, the firms were the only parties listed in the arbitration.
Now, Ohta wrote, Ameriprise has added, “all 30 financial advisors” affected by the forensic search order to the arbitration and “is in the process of pursuing relief against them directly in the arbitral forum” (although Ohta noted that Ameriprise had dropped nine advisors from the arbitration proceedings).
Ameriprise declined to comment, and LPL did not respond to requests for comment prior to publication.
Earlier this week, an attorney representing LPL Financial responded to a court request asking that the firm delete both an Excel spreadsheet with client information, as well as the “underlying data for individuals listed on the Bulk Upload Tool who did not become LPL customers.”
The Bulk Upload Tool was at the center of a since-dropped aspect of the lawsuit, in which LPL claimed Ameriprise had defamed the former firm by alleging clients’ data had been breached in some advisors’ move to LPL. Ameriprise had called for LPL to ensure that any non-LPL client data was entirely scrubbed from their systems.
According to the attorney, LPL deleted both the spreadsheet and the underlying data for customers whose information was provided to LPL but did not become LPL customers. The firm began the process in January of last year, and the data deletions were concluded earlier this year.
“LPL believes that all deletions are complete and does not expect that any additional work is necessary; however, if LPL were to learn of additional information, it would delete such information, after copy and segregation, in accordance with the requirements of the Stipulated Order and the process outlined in this declaration,” the attorney wrote.