Hightower Advisors is suing a Washington-based RIA and several other of its advisors, claiming the RIA conspired with a former Hightower worker to steal confidential consumer data that has allegedly value Hightower $150 million in consumer belongings.
It’s the most recent authorized improvement in advisor Lars Knudsen’s combat with Hightower, which started after the RIA acquirer fired him this previous winter. However this latest criticism doesn’t identify Knudsen, and as a substitute targets Hohimer Wealth Administration, the place Knudsen went to work after he was fired.
In an announcement to WealthManagement.com, Knudsen mentioned the allegations had already been refuted in prior lawsuits, and that it reveals that Hightower will “say or do something to intimidate or destroy anybody who stands as much as them,” deeming it a sample of “bully conduct.”
“They’re doing it on this new submitting and have accomplished it to former Hightower advisors from Delaware to California and in all places in between,” Knudsen mentioned. “They’re additionally sending a sign to any Hightower advisor that in the event that they select to go away the agency, they, too, can be dragged by the authorized and monetary morass they’ve created for me and so many others.”
In accordance with authorized filings, Knudsen is a Washington-based advisor who based Triad Wealth Administration earlier than transitioning that enterprise to Hightower in 2014. In 2018, the principals of the agency’s Bellevue department (together with Knudsen) shaped Hightower Bellevue Advisors, providing extra independence (and possession stakes). Hightower claimed that Knudsen signed non-solicitation vows as a part of this settlement.
On this newest swimsuit filed in Washington state court docket, Hightower claims it performed an inside investigation in 2023 and 2024, which revealed that Knudsen diverted consumer funds from the agency to outdoors companies. Notably, the agency claimed Knudsen directed over $30 million in consumer funds into 11 actual property enterprise LLCs he managed outdoors of the agency. (Knudsen’s spouse was a member or supervisor, and Knudsen was a member of a number of the LLCs, in response to Hightower.)
Hightower additionally claimed Knudsen engaged in a sample of “extreme verbal abuse and bullying” and introduced a gun into the workplace in violation of Hightower’s coverage. (Knudsen has denied these accusations.) Hightower fired Knudsen in late February, in response to this new criticism. Hightower then sued Knudsen, claiming he broke non-compete agreements along with his former employer simply weeks after being dismissed.
Nonetheless, Knudsen retaliated along with his personal criticism in federal court docket, alleging Hightower “hijacks” advisors’ books of enterprise earlier than pushing these staff out to reap the rewards.
Along with Hohimer Wealth Administration as an entity, the defendants within the latest swimsuit are Hohimer monetary advisors Bryan Abdelnoor and Kyle Balcos and consumer service affiliate Hannah Atchison. Knudsen is just not listed as an advisor on the agency’s website, neither is he SEC-registered with the agency, however Andrew Escobar, Knudsen’s lawyer, confirmed he’s with the agency. Hohimer Wealth didn’t reply to a request for remark.
In its swimsuit, Hightower claimed Knudsen linked up with Hohimer “instantly” after he was fired and started “secretly colluding” with Abdelnoor, Balcos and Atchison.
“Put merely, Defendants made a plan to use the consumer relationships and confidential data Knudsen had been entrusted with at Hightower to deliver these purchasers to Hohimer, to Defendants’ monetary profit at Plaintiffs’ expense,” the criticism learn. “Knudsen and Defendants hid their efforts from Plaintiffs.”
In March, Hightower claimed it despatched a cease-and-desist letter to Hohimer Managing Companion David Hohimer detailing Knudsen’s firing and the allegations that led to it. The letter acknowledged that he’d agreed to “sure post-termination restrictive covenants, that are in impact.” In accordance with Hightower, Hohimer by no means responded to the letter.
In accordance with Hightower, the alleged scheme is working; about 61 purchasers serviced by Knudsen on Hightower’s behalf have left for Hohimer, with a complete worth of $150,652,285. Hightower claimed the most recent consumer defection occurred on Nov. 7 and mentioned “a number of” purchasers have knowledgeable Hightower they’ve been contacted by Knudsen or different Hohimer officers arguing their cash is “not secure” at Hightower.
“If any remaining purchasers are diverted away, Hightower will lose these relationships for years into the long run,” he mentioned. “The damages that stream from such occurrences are substantial.”
However Knudsen has argued in court docket filings that Hightower pressured him to retire whereas different advisors at his outdated agency disparaged him to purchasers to push him out. In an announcement to WealthManagement.com, Escobar mentioned there was “completely no ‘collusion’,” and argued Hightower “knowingly asserted” false claims, which might be sanctionable by the court docket.
“Hightower is just trotting out most of the similar drained allegations which were both defined or wholly debunked within the prior litigation,” he mentioned. “They’ll hold utilizing this tactic of utilizing the authorized system to intimidate and bankrupt individuals like Lars, however they know they’re improper.”
In April, a state choose dominated that Hightower couldn’t distribute Knudsen’s Kind U5 to anybody apart from a regulatory authority and couldn’t disparage him to purchasers. Final month, Hightower dismissed claims in Illinois federal court docket in opposition to Knudsen, alleging he broke his non-solicitation vow days earlier than a choose was set to rule on Hightower’s request for an injunction.
“The reason being apparent—Hightower knew that the Justice of the Peace choose was poised to disclaim its movement for a preliminary injunction and rule that the restrictive covenants are wholly overbroad and unenforceable, and was afraid of such a stinging public loss, which might probably have invalidated Hightower’s agreements with dozens of advisors nationwide,” Escobar mentioned. “Lars has little doubt that the Washington court docket will come to the identical conclusion.”
Hightower declined to touch upon this story, claiming it doesn’t touch upon pending litigation. The agency has beforehand mentioned it might pursue its claims in “binding arbitration,” which Escobar anticipated to be settled by January 2025.
Knudsen additionally just lately filed a criticism in opposition to the 4 principals at Bellevue Hightower, arguing they diverted funds from the agency to cease him from getting the compensation he was owed. That swimsuit is ongoing. In accordance with Escobar, they intend to file a movement for abstract judgment within the arbitration within the coming weeks, with Escobar saying they’re “assured” they’ll prevail.
