LPL Financial and advisor Douglas Kenoyer, facing legal action from Ameriprise Financial stemming from Kenoyer's move to LPL, lost a round with a Financial Industry Regulatory Authority arbitration panel.
Ameriprise has accused LPL and Kenoyer, in federal court and before FINRA, of unfair competition and misappropriating trade secrets, among other violations, alleging the advisor improperly solicited his clients to move their assets to LPL before he changed firms.
A FINRA arbitration panel recently issued an injunction against LPL Financial and Kenoyer, which will remain in effect until the authority enters a final award in the matter, lawyers for Ameriprise told the U.S. District Court in Seattle this week.
The injunction essentially maintains a temporary restraining order the court issued in October requiring the advisor to return all confidential, proprietary and trade secret information and enjoining him from further misusing the information, among other conditions for him and LPL.
The panel found Kenoyer wasn't entitled to Protocol for Broker Recruiting protections "because he failed to comply with its terms in that he pre-solicited Ameriprise clients, solicited Ameriprise advisors, asked Ameriprise advisors to pre-solicit Ameriprise clients, and took Ameriprise confidential information that would be allowed under the protection of the Protocol, if eligible, as well as information not allowed under the Protocol."
Ameriprise “has shown a substantial likelihood of success on the merits" and "would suffer irreparable harm in loss of reputation, goodwill and business relationships if the Panel did not continue the temporary restraining order at least in part as an injunction," the panel found.
Kenoyer has called the court case "the latest salvo in an economic war Ameriprise is attempting to wage against its competitor, LPL Financial, … and its former financial advisors for electing to resign from the company and move their practices to LPL." LPL has called the claims meritless.
The panel's decision "further validates Ameriprise’s claims that LPL’s recruitment practices put client information as well as advisors at risk," an Ameriprise spokesperson told ThinkAdvisor last week. Lawyers for Kenoyer didn't immediately respond to emails seeking comment, nor did LPL.
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