A former Washington-based Hightower adviser won a temporary restraining order against the firm after it accused him of bringing a gun into one of its offices and violating restrictive covenants by soliciting clients after firing him.
Lars Knudsen also successfully moved a lawsuit against Hightower back to Washington state court after the RIA tried to transfer it to federal jurisdiction (Hightower is also suing her former clerk at the Illinois federal court).
“Hightower seems to think they can say anything, even the most outrageous accusations, without consequence. But we have the truth on our side,” said Knudsen. “They're bullies, plain and simple.”
In his complaint filed in Washington state court on March 20, Knudsen accused his former employer of a scheme to bring him into Hightower's group to get his signature on a legally unenforceable non-solicitation agreement. and to send him away so they could keep Knudsen's book. business for themselves.
“Hightower's motivation in ripping off advisers like Knudsen from their clients is clear: greed,” the complaint said. “At a company level, Hightower is trying to steal clients from successful advisors who are leaving or trying to force them to retire (like Knudsen) so it can prop up its valuation while it looks to find a buyer.”
In her Illinois-based lawsuit, Hightower claimed she fired Knudsen in late February for bringing a gun into the firm's Bellevue, Wash., office in violation of company policy, among other allegations. After his firing, RIA alleged that Knudsen reached out to former clients to disparage his former employer while starting work at a competitor.
Hightower declined to respond for this story, with a spokesman saying he does not comment on pending litigation.
Knudsen founded Triad Wealth Management and transitioned that business to Hightower in 2014, working out of the firm's Bellevue branch. In 2018, that firm's principals founded HT Bellevue Advisors, gaining more independence and ownership stakes while remaining advisors to Hightower, bringing their clients into Hightower's systems.
A year later, Hightower acquired a larger interest in the firm, and as a result, Knudsen allegedly signed a non-compete agreement with that RIA. However, Knudsen claimed in his complaint that the restrictive covenants are extremely harsh, with provisions that could extend beyond 2028 and span the entire country.
According to Knudsen, Hightower brought two new counsel to the Bellevue firm through an acquisition, resulting in an “immediate” change in culture. Despite Knudsen's assertions that he had no plans to retire anytime soon, the adviser said Hightower repeatedly pressured him to plan for retirement. He claimed that other members of the firm made disparaging complaints about him to clients, all to drive him away.
However, in her lawsuit, Hightower alleged that an investigation revealed that Knudsen had not shared earnings with his firm partners, had diverted about $225,600 in client fees belonging to the firm and had not spent firm funds on personal belongings.
A managing partner also alleged that Knudsen brought a loaded firearm into the office on multiple occasions, that he discussed it frequently, and that she often heard him holstering and pulling his gun from outside his office. On one occasion, he allegedly kept the gun on the table during an “exit call.”
Knudsen denied all of this, including the firearms charges, although he did admit that a few years ago, he accidentally brought his own firearm into the office. After realizing the mistake, Knudsen said he immediately put the gun back in his car and never “brandished” it. However, Hightower fired Knudsen in February.
The RIA alleged in its Illinois lawsuit that Knudsen repeatedly contacted former clients as he prepared to start work at Seattle-based Hohimer Wealth Management (Knudsen is not currently registered with Hohimer or any other firm). Hightower claimed that Knudsen warned their advisers their money “wasn't safe”.
An Illinois federal court judge denied Hightower's request for a TRO in Knudsen while considering counsel's motion to stay court proceedings due to the ongoing court battle between the two parties in Washington state.
But in Washington state court this week, Judge Jason Holloway ruled in favor of Knudsen's TRO against Hightower, requiring the RIA not to release Knudsen's Form U5 to anyone other than the regulatory authority, not to state that the regulators approve anything in that document and not to disparage Knudsen. for its customers.
More than a dozen of Knudsen's clients filed affidavits supporting Knudsen's TRO, according to Andrew Escobar, a partner at Seyfarth Shaw, which represents Knudsen. His lawyers will now move to block Hightower from enforcing her non-solicitation contract with the adviser.