Hightower claims a former advisor broke a non-compete settlement simply weeks after the agency fired him, in accordance with a go well with filed in Illinois federal courtroom.
The Chicago-based RIA acquirer alleged that Lars Knudsen was fired in late February for bringing a gun to the workplace in violation of firm coverage, amongst different allegations.
Now, they declare he reached out to former shoppers to disparage Hightower whereas maneuvering to begin work at a competitor agency. Hightower requested that the courtroom challenge a short lived restraining order to cease additional hurt to their enterprise.
“If these remaining shoppers are diverted away, Hightower will lose these relationships for years into the longer term,” the grievance learn. “The damages that movement from such an incidence are enormous and intensely tough to quantify.”
However Knudsen’s filed his personal go well with in Washington federal courtroom, alleging the RIA “hijacks” advisors’ books of enterprise and corners them into signing legally unenforceable restrictive covenants earlier than pushing that advisor out “on pretextural grounds,” in accordance with the grievance. Andrew R. Escobar, a associate with the legislation agency Seyfarth Shaw, is representing Knudsen and stated Hightower was “engaged in an unseemly disinformation marketing campaign” in opposition to him.
“It’s no secret that HighTower is understood for its strong-arm bully ways which can be nothing lower than predatory,” Escobar stated. “Our lawsuit outlines how Hightower is systematically pushing Lars out of his occupation by spreading false and deceptive info to his long-time shoppers in order to poach his shoppers and their hundreds of thousands of {dollars} in monetary property.”
Knudsen is a Washington state-based advisor who based Triad Wealth Administration. He transitioned that enterprise to Hightower in 2014 after which labored within the agency’s Bellevue department.
In 2018, the principals at that agency shaped HT Bellevue Advisors, which allowed them extra independence (and possession stakes), whereas nonetheless working as Hightower advisors for the agency’s Bellevue shoppers. In 2019, Hightower acquired a larger curiosity within the agency, allegedly netting Knudsen $900,000 and important fairness.
As a part of the settlement, Knudsen signed a covenant proscribing his actions ought to he go away or be fired from the agency. Specifically, the settlement barred Knudsen from “contacting or soliciting Hightower shoppers” or competing in opposition to the agency for twenty-four months after any “involuntary termination.”
In keeping with Hightower, Knudsen’s troubling conduct led them to fireside him in late February.
By way of an inner investigation, Hightower allegedly discovered that Knudsen didn’t break up earnings together with his agency companions and diverted about $235,600 in consumer charges belonging to the agency.
Knudsen additionally allegedly spent agency funds on private objects (however blamed his employees for not making the right distinction). In keeping with Hightower, different companions on the agency stated Knudsen would typically invoice the apply for private bills and would “feign ignorance” when confronted however return to the identical practices inside a number of months.
Randall Williams-Gurian, a managing associate and senior advisor at HT Bellevue, additionally submitted a declaration to the courtroom that Knudsen introduced a loaded firearm into the workplace on a number of events.
“Interviews with a number of employees members indicated that they had been conscious Knudsen introduced a firearm into the Hightower Bellevue workplace and that he mentioned it typically, admitting to at least one person who the sound she heard from outdoors his workplace had been his gun going into his holster,” Williams-Gurian wrote. “Different employees members have been current whereas his gun was displayed within the room, together with on the desk throughout one termination dialog.”
Hightower claimed that a number of days earlier than he was fired, Knudsen requested a spreadsheet with the names, numbers and emails for all of his shoppers; he by no means returned the data, the agency claims within the go well with.
Hightower additionally claimed Knudsen was searching for employment on the Seattle-based agency Hohimer Wealth Administration (although Knudsen just isn’t listed as an advisor on the agency’s website, nor has he registered with the SEC at that agency). Hohimer Wealth didn’t reply to a request for info previous to publication.
Within the interim, the RIA claimed “a number of shoppers” stated they’d been contacted by Knudsen, who informed them their cash was “not protected” with Hightower, urging them to “delink their accounts,” in accordance with the go well with.
In a single case, an unnamed consumer informed Hightower that her mother and father had been “unsettled” by a name from Knudsen. The consumer additionally had her personal questions for Hightower, as Knudsen had questioned whether or not the remaining companions on the Bellevue agency might run the enterprise, in accordance with the grievance.
Knudsen disputed all of this in his go well with, claiming Hightower had been spreading false info to Knudsen’s shoppers, together with that he retired. He referred to as the allegations he stole funds from Hightower and the companions on the Bellevue agency “utterly baseless.”
Knudsen contended that two advisors Hightower added to the group in 2022 caused a profound change in tradition on the agency. In 2024, Knudsen argued, Hightower moved to push him out, saying that there was one incident 5 years earlier than wherein he unintentionally left his firearm on when getting into the workplace. After a co-worker requested if he was “carrying,” Knudsen stated he realized he nonetheless had the gun and introduced it again to his automotive, the place he allegedly saved it locked within the glove compartment.
“All I wish to do is apply the occupation I really like and serve my shoppers,” he stated in a press release concerning the go well with. “What I believed might be a brief dialog with Hightower to do exactly that has now was a battle in opposition to a well-funded behemoth. I imagine Hightower is calculating its potential sale value by inflating its property by means of making an attempt to take my consumer base, smash my repute and bar me from training my occupation.”
A Hightower spokesperson stated that though they couldn’t touch upon the substance of pending litigation, “Hightower intends to hunt enforcement of its agreements, particularly together with the safety of consumer info, to the complete extent allowed by legislation. We look ahead to vigorously pursuing our claims and to acquiring acceptable aid from the Courtroom.”
Final month, a former advisor filed a go well with in opposition to Hightower in California federal courtroom, claiming the restrictions in his contract made persevering with within the business inconceivable. Darren Reinig’s agency was acquired in 2019, and he stayed with Hightower till deciding to begin a brand new RIA enterprise this 12 months.
However Reinig claimed the settlement sure him from beginning any enterprise that Hightower could have interaction with, and he couldn’t contact “any Hightower consumer,” which might lengthen to lots of of companies over dozens of states (Hightower shunned commenting on the litigation).
