Hightower Advisors is facing another legal challenge as a leading advisor in its network files a complaint against the firm in Washington.
Financial advisor Lars Knudsen, along with his entity, Telos Investment Holdings Inc., has initiated a lawsuit against Hightower Holdings in King County Superior Court, accusing Hightower of engaging in unethical practices.
Knudsen’s legal action also targets Hightower Bellevue partners Dan Stober – his former partner and co-founder of Triad Wealth Stewardship, which Hightower acquired in 2014 – along with Randy Williams-Gurian, Tara Johnson, and Sharon Lailey as defendants.
The lawsuit alleges Hightower engaged in numerous unscrupulous tactics, including the use of illegal noncompete clauses and spreading false allegations to poach Knudsen's clients and undermine his professional standing and client relationships.
"Hightower and Hightower Bellevue associates have engaged in an unseemly disinformation campaign and breaches of contract solely to enrich Hightower at the expense of Lars’ reputation, livelihood, and the financial health of his long-time clients," Andrew R. Escobar of Seyfarth Shaw, who represents Knudsen, said in a statement provided to InvestmentNews.
The lawsuit alleges that Hightower is using overly restrictive, unlawful noncompete agreements to prevent Knudsen – a three-decade veteran of the industry – from reestablishing his business in the US until 2030.
Knudsen argues Hightower is attempting to capture his client base and hurt his reputation as part of an effort to inflate its assets as the market speculates the firm is up for sale.
That pattern of behavior was alleged in another recent case filed against Hightower in California, with former Hightower advisor Darren Reinig similarly complaining of “overly broad and unreasonable” non-compete and non-hire language in Hightower’s past contracts.
"All I want to do is practice the profession I love and serve my clients," Knudsen said, lamenting how he’s been forced into “a battle against a well-funded behemoth.”
Knudsen asked the court to prohibit Hightower from imposing its purportedly overreaching noncompete clauses against him.
"I just want to move forward doing what I’m known for – solid and trustworthy financial planning for my clients and their families," he said.
Hightower has also filed legal action against Knudsen. In a complaint filed in U.S. District Court for the Northern District of Illinois, Eastern Division, on Thursday, the firm alleged Knudsen is in violation of post-sale restrictions it put in place when he sold it a piece of his business.
"Although we do not comment on the underlying substance of pending litigation ... we strongly deny Mr. Knudsen’s allegations," a Hightower spokesperson said in an emailed statement to InvestmentNews.
"We will vigorously defend against these claims and look forward to the truth coming out in court," the spokesperson said.
This article was updated on March 22.
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