Ameriprise Financial alleges that LPL Financial and advisor Douglas Kenoyer, who switched to the rival broker-dealer last year, have violated a court order requiring them to return confidential information and refrain from soliciting clients whom Kenoyer served at Ameriprise.
In a motion filed last week in U.S. District Court for the Western District of Washington in Seattle, Ameriprise asked the judge to require LPL and Kenoyer to show why they shouldn’t be held in civil contempt of court for ignoring an Oct. 25 temporary restraining order.
The order required LPL and Kenoyer to return all Ameriprise confidential client information within 72 hours, enjoined them from misusing, disclosing or possessing the information, and prohibited them from soliciting any client serviced by Kenoyer at Ameriprise.
Kenoyer responded three days after the order that he had complied with it by returning or destroying all such information, Ameriprise says a motion filed Friday.
The advisor, however, recently testified in an underlying Financial Industry Regulatory Authority arbitration “that he had been actively soliciting customers he serviced while at Ameriprise,” Ameriprise contends.
Kenoyer also admitted to Ameriprise last month that he “still possessed over 1,600 pages of Ameriprise confidential client information,” four months and two days after the court’s temporary restraining order, according to Ameriprise.
Moreover, “LPL still clearly refuses to uphold its supervisory and regulatory obligations with respect to Defendant Kenoyer. Testimony and evidence in the underlying arbitration hearings similarly made clear that Defendant LPL failed and refused to take any of the necessary steps to ensure compliance with the Court’s Order,” Ameriprise contends.
“Meanwhile, LPL continued to happily accept the Ameriprise clients and assets that improperly flowed into LPL based on this clear misconduct and reaps the pecuniary benefits of same,” the motion states.
LPL is expected to respond to the motion in court in coming weeks.
In the original court complaint filed in October, Ameriprise accused Kenoyer and LPL of misappropriation of trade secrets and unfair competition, among other violations, stemming from Kenoyer's employment switch Sept. 19.
The complaint alleges that Kenoyer, who was registered as an advisor and broker with Ameriprise for 18 years, improperly solicited clients to move their assets to LPL before he changed firms. Ameriprise also accuses Kenoyer and LPL of unjust enrichment, conversion and interference with business relationships, and Kenoyer of breaching contract and fiduciary duty.
LPL has called the claims meritless, and Kenoyer has described the court case as "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."
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. The injunction essentially maintains the court’s temporary restraining order requiring the advisor to return all confidential, proprietary and trade secret information and enjoining him from further misusing the data.
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.
A lawyer for Kenoyer didn’t immediately respond to an email seeking comment Tuesday.
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