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Hightower claims a former advisor broke a non-compete settlement simply weeks after the agency fired him, in line with a go well with filed in Illinois federal court docket.
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 purchasers to disparage Hightower whereas maneuvering to begin work at a competitor agency. Hightower requested that the court docket concern a short lived restraining order to cease additional hurt to their enterprise.
“If these remaining purchasers are diverted away, Hightower will lose these relationships for years into the longer term,” the criticism learn. “The damages that circulation from such an prevalence are big and very tough to quantify.”
However Knudsen’s filed his personal go well with in Washington federal court docket, 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 line with the criticism. Andrew R. Escobar, a companion with the legislation agency Seyfarth Shaw, is representing Knudsen and stated Hightower was “engaged in an unseemly disinformation marketing campaign” towards him.
“It’s no secret that HighTower is thought 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 purchasers in order to poach his purchasers and their hundreds of thousands of {dollars} in monetary belongings.”
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 purchasers. In 2019, Hightower acquired a higher 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 depart or be fired from the agency. Particularly, the settlement barred Knudsen from “contacting or soliciting Hightower purchasers” or competing towards the agency for twenty-four months after any “involuntary termination.”
In response to Hightower, Knudsen’s troubling habits led them to fireplace him in late February.
Via an inside 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 correct distinction). In response to Hightower, different companions on the agency stated Knudsen would normally invoice the observe for private bills and would “feign ignorance” when confronted however return to the identical practices inside just a few months.
Randall Williams-Gurian, a managing companion and senior advisor at HT Bellevue, additionally submitted a declaration to the court docket 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 usually, admitting to 1 individual that the sound she heard from exterior 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 purchasers; he by no means returned the data, the agency claims within the go well with.
Hightower additionally claimed Knudsen was looking for employment on the Seattle-based agency Hohimer Wealth Administration (although Knudsen will not be 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 purchasers” stated they’d been contacted by Knudsen, who informed them their cash was “not protected” with Hightower, urging them to “delink their accounts,” in line with the go well with.
In a single case, an unnamed consumer informed Hightower that her dad and mom 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 may run the enterprise, in line with the criticism.
Knudsen disputed all of this in his go well with, claiming Hightower had been spreading false info to Knudsen’s purchasers, together with that he retired. He referred to as the allegations he stole funds from Hightower and the companions on the Bellevue agency “fully baseless.”
Knudsen contended that two advisors Hightower added to the group in 2022 led to 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 observe the occupation I really like and serve my purchasers,” he stated in a press release concerning the go well with. “What I believed could possibly be a brief dialog with Hightower to just do that has now become a battle towards a well-funded behemoth. I imagine Hightower is calculating its attainable sale worth by inflating its belongings by way of making an attempt to take my consumer base, wreck my fame and bar me from practising 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 total extent allowed by legislation. We stay up for vigorously pursuing our claims and to acquiring acceptable reduction from the Court docket.”
Final month, a former advisor filed a go well with towards Hightower in California federal court docket, claiming the restrictions in his contract made persevering with within the business unimaginable. Darren Reinig’s agency was acquired in 2019, and he stayed with Hightower till deciding to begin a brand new RIA enterprise this yr.
However Reinig claimed the settlement sure him from beginning any enterprise that Hightower might interact with, and he couldn’t contact “any Hightower consumer,” which may lengthen to tons of of companies over dozens of states (Hightower kept away from commenting on the litigation).
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