Hightower denied the allegations he had made against a former adviser days before a judge ruled on the RIA's request for a restraining order against him.
of The Chicago-based RIA buyer sued Lars Knudsen in Illinois federal court last Marchalleging that he broke non-compete agreements weeks after the firm fired him for, among other things, allegedly bringing a gun into the office in violation of company policy.
Knudsen countered in Washington federal courtaccusing Hightower of “hijacking” advisers' books of business and getting them to sign legally unenforceable restrictive covenants before firing that adviser “for pretextual reasons,” according to the complaint. According to Knudsen's lawyer, the firm ran a “disinformation campaign” against their former employee.
In an Oct. 4 announcement, Hightower informed the judge in the Illinois court proceeding that all claims before the court had been “voluntarily settled, without prejudice.” According to court records, the judge in the case was set to rule on a restraining order on Oct. 10 after several delays.
In a statement, Knudsen said he believes Hightower dismissed their claims because he was afraid the court would rule in his favor. He said the process had taken a financial and emotional toll on his family.
“It's a relief and a disappointment that Hightower pulled out, but not before spending thousands of my savings to defend what I knew to be true – they just wanted my clients' assets and would do and say anything to keep them,” Knudsen said. .
Knudsen founded Triad Wealth Management, but transferred that business to Hightower in 2014 and worked in the firm's Bellevue, Wash., office. In 2018, that firm founded Hightower Bellevue Advisors, gaining more autonomy while maintaining the benefits Hightower offers. The following year, Hightower gained more interest, prompting Knudsen to sign a non-compete clause.
Knudsen claimed that two Hightower advisers added to the group in 2022 brought about a profound change in the firm's culture. Although Knudsen had no plans to retire anytime soon, he accused Hightower of pressuring him to do so, while other advisers made disparaging comments about him to clients to drive him away.
However, Hightower accused Knudsen of failing to share the firm's revenue with his partners and diverting more than $225,000 in client fees for his use.
One partner even accused Knudsen of bringing a loaded gun into the office on several occasions, at one point placing the gun on the desk during a “disruptive conversation” with an employee. The firm fired him and claimed he then contacted former clients, warning them their money was “not safe”.
Knudsen denied the allegations, including the gun claims. He admitted that he had accidentally brought his firearm into the office once a few years ago, but after realizing the mistake, he immediately put it back in his car.
In April, a Washington state judge ruled that Hightower could not distribute Knudsen's Form U5 to anyone other than a regulatory authority and could not disparage it to customers.
In statements provided by Knudsen's attorney, some of his clients, including Anthony Kaufman, said they were shocked when Hightower fired their longtime adviser.
“It became clear to me through interaction with Hightower that they have a toxic corporate culture that disregards both their team members and their customers,” he said. “What really bothered me is that they painted Lars as someone who was irresponsible or deceitful. Anyone who knows Lars will see through the deception, as I believe the courts will.”
Knudsen's longtime client, Jeff Snedden, claimed he only received a brief phone call saying Knudsen was no longer with Hightower. When he probed further, the firm declined to provide any details. When he temporarily suspended Hightower's advisory role while he considered his options, Snedden said the firm “immediately terminated” the relationship.
“It made it clear to me that Hightower was just as interested in punishing Lars' old clients as they were in punishing Lars personally,” he said. “To my family, this was beyond the pale — an act of arrogance that showed Hightower had no concern for my family's financial needs or well-being.”
Currently, the Illinois case ended with Hightower dismissing the claims, and Hightower's remaining claims against him are proceeding in arbitration. A Hightower spokesman said the firm does not comment substantively on pending litigation, but looks forward to “pursuing all of our claims in binding arbitration.”
In addition, Knudsen filed a lawsuit against four other directors at Bellevue Hightower, arguing that they diverted funds from the firm to prevent him from receiving the compensation he was owed. (The four principals were also named in Knudsen's original Washington state lawsuit filed in March.)