Advisors win appeal to resist device searches in LPL-Ameriprise recruiting dispute

A group of current and former LPL advisors has won an appeal allowing them to resist surrendering their personal devices to a forensic examiner seeking evidence that they improperly removed client data from Ameriprise.

A panel of three judges on the Ninth Circuit Court of Appeals last week found that a lower court had "abused its discretion" when it denied last summer an attempt by 10 advisors to intervene in a recruiting dispute between LPL Financial and Ameriprise. The appellate decision now sends the case back to Judge Jinsook Ohta of the federal court for the Southern District of California.

At the heart of the dispute is a lawsuit Ameriprise filed in July 2024 accusing LPL of a "widespread pattern and practice of harvesting and misappropriating Ameriprise's private, confidential client information and trade secrets." The firms consented in December of that year to allowing an outside forensic examiner to preserve evidence until the recruiting dispute could be resolved by an arbitration panel of the Financial Industry Regulatory Authority.

Advisors: 'No one should be forced to surrender their privacy'

Various advisors in the dispute, all of whom had come to LPL from Ameriprise, argued that the deal was reached without their knowledge and without an opportunity for them to weigh in on its final terms. In a motion to intervene filed last May, the advisors argued they were caught in a massive recruiting dispute between "two corporate behemoths." They argued, "No one should be forced to surrender their privacy without notice, without consent, and without a say."

Judge Ohta in December rejected that attempt to intervene, finding in part that they hadn't filed their legal motions in a timely manner. The Ninth Circuit Court of Appeals has now disagreed.

The appellate judges found that requiring advisors to turn over their devices to a third-party examiner could, "as a practical matter, impair or impede [Advisors'] ability to protect [their] interest."

"To search Advisors' devices and repositories, as the Stipulated Order requires, may necessitate the installation of software on Advisors' devices, if not the physical surrender of the devices and repositories," the judges wrote in their Jan. 12 decision. "This could impair or impede Advisors' ability to protect their possessory interest in their devices and repositories."

The appeals panel also rejected the lower court's finding that the advisors hadn't been timely in their earlier attempt to intervene. The appellate judges — Richard Clifton, John Owens and Ana de Alba — noted that the advisors only learned of the terms of the deal requiring them to turn over their devices on March 14.

"The delay between March 14, 2025, and the time that Advisors moved to intervene is approximately two months, which — in the context of this case — is not excessive," they wrote.

LPL declined to comment on the appellate decision. Ameriprise didn't immediately respond to a request for comment.

Phil Waxelbaum, an industry recruiter and the founder of Masada Consulting, said the advisors who succeeded on appeal have done little more than "rolled this thing up in a ball and shoved it down the hall." 

They may have established they have the right to intervene in the dispute between Ameriprise and LPL. But they still must convince Judge Ohta at the lower court level that they shouldn't have to surrender their devices.

"They get to go back and claim, 'Hey, this is our work product, these were our devices, there's private material on these,'" Waxelbaum said. "But it's also reasonable to assume that the judge is going to stay in the same lane that he was in before. If you were a gambler, you'd say it's a substantial probability that this judge is going to say, 'Nope, turn over those devices.'"

The advisors' lawyer in their appeal, George Freeman III of Barrasso Usdin Kupperman Freeman & Sarver in New Orleans, did not respond to requests for comment. Of the 10 advisors in the dispute, eight — Loyd Bouldin, Wade Cardon, Bryan Hutto, Joshua Lambert, Martial Martinoni, Steven Schwartz, Samuel Sigler and Keith Smith — are still registered with LPL.

As for the remaining two, Cody Mares let his broker registration lapse last year, and Keith Sullivan is now affiliated with Warner Wealth, a registered investment advisory that uses LPL as its broker-dealer.

The original recruiting dispute and a separate appeal

Ameriprise's initial lawsuit in the recruiting dispute accused LPL of using a "bulk upload tool" from 2018 to the start of 2022 to help 30 recruited advisors transfer confidential customer data. The information allegedly moved over included clients' Social Security Numbers, dates of birth, ID numbers, routing information, account values and securities values.

The case involves at least one more appeal. Separate from the advisors who prevailed at the appellate level last week, a group of 13 advisors is pursuing a similar challenge to Judge Ohta's denial of their right to intervene in the Ameriprise-LPL recruiting dispute.

A decision in that case has not yet been issued. The appeals decision handed down last week was not officially published and therefore doesn't set a legal precedent to be consulted in similar disputes.

Ameriprise and LPL's long legal history

LPL Financial and Ameriprise have been caught up in a long series of court battles in the past year over LPL's recruiting practices. In June of last year, Ameriprise took LPL to court over its recruitment of a father-son advisory duo that had previously managed about $250 million for Ameriprise in the Detroit suburb of Bloomfield Hills, Michigan. 

And last February, Ameriprise sued LPL over its recruitment of a three-member advisory team now known as Jackson Roskelley Wealth Advisors. Among other things, the legal actions accuse LPL of violating a voluntary industry pact known as the Broker Protocol, which limits recruited advisors to taking only client names, addresses, phone numbers, email addresses and account titles to their new firms. Both Ameriprise and LPL belong to the protocol.

LPL filed its own suit in April 2025, alleging Ameriprise had sent out spurious data breach notices to thousands of its clients who had transferred their business to LPL along with advisors recruited from Ameriprise. Ameriprise contended it was merely following laws designed to protect confidential client data, while LPL accused its rival firm of defamation.