Hightower has forcefully responded to a current lawsuit introduced towards the large RIA aggregator by a former advisor and has charged the advisor, Lars Knudsen, with diverting Hightower funds, misappropriating commerce secrets and techniques and improperly allocating consumer charges.

Hightower Holdings additionally mentioned in a submitting in response to  Knudsen’s lawsuit, that he created a “hostile work setting” by a “sample of extreme verbal abuse and bullying Hightower Bellevue’s staff.” As plaintiff, Hightower additionally requested in its motion for injunctive aid in assist of arbitration towards Knudsen filed yesterday within the District Courtroom for the Northern District of Illinois. “Accordingly, Hightower terminated Knudsen on February 26, 2024,” Hightower mentioned within the submitting.

Hightower entered its submitting as a part of its try to problem a lawsuit Knudsen and his possession entity Telos Funding Holdings Inc. filed Wednesday charging Hightower with breach of contract, poaching his purchasers and implementing sweeping non-compete agreements. Hightower can be looking for to resolve the disupte although arbitration reasonably the courtroom.

“As a cloth time period of Hightower’s acquisition of a share of Knudsen’s enterprise, Knudsen agreed to sure post- sale restrictions on actions which had been designed to guard Hightower from unfair competitors, and to guard Hightower’s funding within the enterprise it acquired from Knudsen,” Hightower mentioned in its criticism. “Knudsen is presently in violation of these post-sale restrictions, and additional substantial breaches of those restrictions by Knudsen are imminent.”

Hightower is asking the courtroom to “protect the established order pending arbitration and to cease the continued irreparable hurt it’s presently struggling.”

In response to Hightower’s criticism, Knudsen filed in the present day a two-week non permanent restraining order movement towards Hightower, some associates and defendants listed in his earlier go well with in King County. A listening to on the movement is being scheduled.

“It’s not stunning that Hightower is taking the low street. That’s what they do,” Knudsen’s lawyer, Andrew R. Escobar, a companion at Seyfarth Shaw LLP, advised Monetary Advisor in an electronic mail assertion. He referred to as their claims “outlandish and unproven” and meant to cowl up the true problems with Hightower’s “unenforceable non-compete and accountability for his or her false and derogatory feedback about Lars.”

“Their sole motivation is greed,” he added. “They’re making an attempt to systematically run Lars out of his occupation to poach his purchasers’ thousands and thousands in belongings. It is clear they’re going to say and do something to make that occur.”

In its submitting, Hightower mentioned it grew to become conscious of Knudsen’s actions by inner investigations carried out in late 2023 and early 2024.

“Hightower discovered that Knudsen was engaged in a scheme of self-dealing and corrupt diversions of funds rightfully belonging to Hightower (and his Companions), in addition to a scheme of charging private bills to Hightower and improperly allocating consumer charges,” Hightower mentioned within the submitting.

In December of 2018 and January 2019, Hightower and Knudsen executed a collection of agreements that result in Knudsen and companions forming Hightower Bellevue Advisors, the place the place Knudsen exhibited “ongoing behavioral points,” in accordance with Hightower.

Knudsen and companions then bought a stake of that enterprise to Hightower, and signed a Customary Protecting Settlement, or SPA, containing non-solicitation, non-hire, non-interference, and non-compete restrictive covenants, in addition to non-disclosure provisions associated to using confidential data, Hightower defined within the submitting.

“As consideration for the Acquisition, Knudsen acquired not solely substantial financial and fairness compensation, but in addition entry to confidential and proprietary Hightower data,” Hightower mentioned.

The defendant, in accordance with the submitting, requested for and acquired a Hightower consumer record containing confidential contact data that Knudsen has been utilizing, since being terminated, to, amongst different issues, disparage Hightower. The previous advisor has additionally advised purchasers to delink their accounts or in any other case cease working with Hightower.

Moreover, Knudsen is “within the last phases of turning into affiliated as an funding adviser with Hohimer Wealth Administration, whom Hightower considers a direct competitor.”

These acts, Hightower argued within the go well with, “violate the clear phrases of the SPA” and the federal Defend Commerce Secrets and techniques Act.

Hightower is petitioning the courtroom to enjoin Knudsen from additional breaching his contractional obligations and to return all confidential data and commerce secrets and techniques to Hightower.

Via this preliminary injunctive, Hightower mentioned it desires the established order maintained till its “substantive declare for damages will be adjudicated in American Arbitration Affiliation arbitration as required by the SPA.