Hightower dismissed claims it introduced towards a former advisor days earlier than a decide was set to rule on the RIA’s demand for an injunction towards him.
The Chicago-based RIA acquirer sued Lars Knudsen in Illinois federal court docket final March, alleging that he broke non-compete agreements weeks after the agency fired him for, amongst different issues, allegedly bringing a gun into the workplace in violation of firm coverage.
Knudsen fired again in Washington federal court docket, accusing Hightower of “hijacking” advisors’ books of enterprise and cornering them into signing legally unenforceable restrictive covenants earlier than pushing that advisor out “on pretextual grounds,” in keeping with the criticism. In accordance with Knudsen’s legal professional, the agency ran a “disinformation marketing campaign” towards their former worker.
In a discover dated Oct. 4, Hightower knowledgeable the decide within the Illinois court docket continuing that each one the claims earlier than the court docket had been “voluntarily dismissed, with out prejudice.” In accordance with court docket information, the decide within the case was set to rule on an injunction on Oct. 10 after a number of delays.
In a press release, Knudsen mentioned he believes Hightower dismissed their claims as a result of it feared the court docket would rule in his favor. He mentioned the method had taken a monetary and emotional toll on his household.
“It’s each a reduction and a frustration that Hightower backed down, however not earlier than I spent 1000’s of my financial savings defending what I knew to be true—they simply wished my purchasers’ property and would do and say something to maintain them,” Knudsen mentioned.
Knudsen based Triad Wealth Administration however transitioned that enterprise to Hightower in 2014 and labored within the agency’s Bellevue, Wash. department. In 2018, that agency based Hightower Bellevue Advisors, gaining extra autonomy whereas retaining the advantages Hightower affords. The next yr, Hightower acquired a bigger curiosity, main Knudsen to signal a non-compete clause.
Knudsen contended that two advisors Hightower added to the group in 2022 led to a profound change within the agency’s tradition. Although Knudsen didn’t plan to retire quickly, he accused Hightower of pressuring him to take action whereas different advisors made disparaging feedback about him to purchasers to push him out.
Nonetheless, Hightower accused Knudsen of failing to separate agency earnings together with his companions and diverting greater than $225,000 in consumer charges for his personal use.
One companion even accused Knudsen of bringing a loaded gun into the workplace on a number of events, at one level placing the weapon on the desk throughout a “termination dialog” with an worker. The agency fired him and claimed that he reached out to former purchasers afterward, warning them their cash was “not protected.”
Knudsen denied the allegations, together with the claims concerning the gun. He acknowledged that he’d by accident introduced his firearm into the workplace one time a number of years earlier, however upon realizing the error, he instantly introduced it again to his automotive.
In April, a Washington state decide dominated that Hightower couldn’t distribute Knudsen’s Kind U5 to anybody apart from a regulatory authority and couldn’t disparage him to purchasers.
In statements equipped by Knudsen’s legal professional, a number of of his purchasers, together with Anthony Kaufman, mentioned they had been dismayed when Hightower fired their long-time advisor.
“It grew to become clear to me with the interplay with Hightower that they’ve a poisonous company tradition that disregards each the crew members and their purchasers,” he mentioned. “What really upset me is that they painted Lars as somebody who was irresponsible or fraudulent. Anybody who is aware of Lars would see proper by the sham, as I imagine the courts will.”
Lengthy-time Knudsen consumer Jeff Snedden claimed he’d solely acquired a quick telephone name saying Knudsen was now not with Hightower. When he probed additional, the agency refused to offer any particulars. When he briefly suspended Hightower’s advisory position whereas contemplating his choices, Snedden mentioned the agency “instantly terminated” the connection.
“This made it crystal clear to me that Hightower was as fascinated with punishing Lars’ long-standing purchasers as they had been in punishing Lars personally,” he mentioned. “For my household, this was past the pale—an act of vanity that confirmed Hightower had no concern for my household’s monetary wants or well-being.”
At the moment, the Illinois case ended with Hightower dismissing the claims, and Hightower’s remaining claims towards him are continuing in arbitration. A Hightower spokesperson mentioned the agency doesn’t substantively touch upon pending litigation however seems to be ahead “to pursuing all of our claims in binding arbitration.”
Moreover, Knudsen filed a lawsuit towards the 4 different principals at Bellevue Hightower, arguing they diverted funds from the agency to forestall him from receiving the compensation he was owed. (The 4 principals had been additionally named in Knudsen’s unique Washington state lawsuit filed in March.)