Hightower dismissed claims it brought against a former advisor days before a judge was set to rule on the RIA’s demand for an injunction against him.
The Chicago-based RIA acquirer sued Lars Knudsen in Illinois federal court last March, alleging 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 fired back in Washington federal court, accusing Hightower of “hijacking” advisors’ books of business and cornering them into signing legally unenforceable restrictive covenants before pushing that advisor out “on pretextual grounds,” according to the complaint. According to Knudsen’s attorney, the firm ran a “disinformation campaign” against their former employee.
In a notice dated Oct. 4, Hightower informed the judge in the Illinois court proceeding that all the claims before the court were “voluntarily dismissed, without prejudice.” According to court records, the judge in the case was set to rule on an injunction on Oct. 10 after several delays.
In a statement, Knudsen said he believes Hightower dismissed their claims because it feared the court would rule in his favor. He said the process had taken a financial and emotional toll on his family.
“It’s both a relief and a frustration that Hightower backed down, but not before I spent thousands of my savings defending 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 transitioned that business to Hightower in 2014 and worked in the firm’s Bellevue, Wash. branch. In 2018, that firm founded Hightower Bellevue Advisors, gaining more autonomy while retaining the benefits Hightower offers. The following year, Hightower acquired a larger interest, leading Knudsen to sign a non-compete clause.
Knudsen contended that two advisors Hightower added to the group in 2022 brought about a profound change in the firm’s culture. Though Knudsen didn’t plan to retire soon, he accused Hightower of pressuring him to do so while other advisors made disparaging comments about him to clients to push him out.
However, Hightower accused Knudsen of failing to split firm earnings with his partners and diverting more than $225,000 in client fees for his own use.
One partner even accused Knudsen of bringing a loaded gun into the office on multiple occasions, at one point putting the weapon on the table during a “termination conversation” with an employee. The firm fired him and claimed that he reached out to former clients afterward, warning them their money was “not safe.”
Knudsen denied the allegations, including the claims about the gun. He acknowledged that he’d accidentally brought his firearm into the office one time several years earlier, but upon realizing the mistake, he immediately brought it back to his car.
In April, a Washington state judge ruled that Hightower couldn’t distribute Knudsen’s Form U5 to anyone besides a regulatory authority and could not disparage him to clients.
In statements supplied by Knudsen’s attorney, several of his clients, including Anthony Kaufman, said they were dismayed when Hightower fired their long-time advisor.
“It became clear to me with the interaction with Hightower that they have a toxic corporate culture that disregards both the team members and their clients,” he said. “What truly upset me is that they painted Lars as someone who was irresponsible or fraudulent. Anyone who knows Lars would see right through the sham, as I believe the courts will.”
Long-time Knudsen client Jeff Snedden claimed he’d only received a brief phone call saying Knudsen was no longer with Hightower. When he probed further, the firm refused to give any details. When he temporarily suspended Hightower’s advisory role while considering his options, Snedden said the firm “immediately terminated” the relationship.
“This made it crystal clear to me that Hightower was as interested in punishing Lars’ long-standing clients as they were in punishing Lars personally,” he said. “For 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 spokesperson said the firm doesn’t substantively comment on pending litigation but looks forward “to pursuing all of our claims in binding arbitration.”
Additionally, Knudsen filed a lawsuit against the four other principals at Bellevue Hightower, arguing 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.)