Judge halts advisor device searches in Ameriprise case over LPL 'bulk upload tool'

Financial advisors who left Ameriprise for LPL will no longer have to surrender their personal devices for a forensic review over allegations of stolen client data, a federal judge ruled this week in the ongoing legal battle between two of the industry’s largest broker dealers. 

The legal saga began in July 2024 when Ameriprise accused LPL of systematically directing advisors to take sensitive information from Ameriprise as they switched to LPL, subjecting those advisors to “regulatory and criminal exposure.” In the U.S. District Court in San Diego, Judge Jinsook Ohta wrote this week that because all 30 of the contested financial advisors have been added as direct parties to a FINRA arbitration hearing scheduled for October, the forensic search of their personal devices is “no longer equitable.”

“With the merits hearing only a few months away, the forensic review measures no longer serve the preliminary relief function the parties and the Court intended. 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” wrote Ohta. 

“Accordingly, the Court modifies the Stipulated Order by deleting Paragraph 4, which requires forensic review, imaging, and deletion of disputed client information from the advisors’ personal devices.” While all 30 advisors were directly added to the arbitration hearing set for October, Ohta noted that nine of those advisors have since been dismissed entirely from the arbitration. 

Ameriprise declined to comment, and LPL did not respond to a request for comment prior to publication. Ameriprise's initial lawsuit in the recruiting dispute accused LPL of using a "bulk upload tool" to help recruited advisors transfer confidential customer data such as their social security numbers and account numbers. 

On May 4, two days before Judge Ohta’s ruling, an attorney representing LPL Financial wrote that LPL has “deleted both the Excel spreadsheet known as the 'Bulk Upload Tool,' and underlying data for those customers whose information was provided to LPL, but who did not become LPL customers,” in response to an earlier court request for deletion of that data. 

LPL attorney Alexander Madrid, partner at McGuireWoods LLP, said that LPL began deleting the data in January of last year and the process continued through April of this year. 

“This process was comprehensive, technical, and multi-layered, requiring significant time and resources to complete,” wrote Madrid. "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.”