Hightower Advisors is suing a Washington-based RIA and several of its advisors, claiming the RIA conspired with a former Hightower employee to steal confidential client information that has allegedly cost Hightower $150 million in client assets.
It’s the latest legal development in advisor Lars Knudsen’s fight with Hightower, which began after the RIA acquirer fired him this past winter. But this newest complaint does not name Knudsen, and instead targets Hohimer Wealth Management, where Knudsen went to work after he was fired.
In a statement to WealthManagement.com, Knudsen said the allegations had already been refuted in prior lawsuits, and that it shows that Hightower will “say or do anything to intimidate or destroy anyone who stands up to them,” deeming it a pattern of “bully behavior.”
“They are doing it in this new filing and have done it to former Hightower advisors from Delaware to California and everywhere in between,” Knudsen said. “They are also sending a signal to any Hightower advisor that if they choose to leave the firm, they, too, will be dragged through the legal and financial morass they have created for me and so many others.”
According to legal filings, Knudsen is a Washington-based advisor who founded Triad Wealth Management before transitioning that business to Hightower in 2014. In 2018, the principals of the firm’s Bellevue branch (including Knudsen) formed Hightower Bellevue Advisors, offering more independence (and ownership stakes). Hightower claimed that Knudsen signed non-solicitation vows as part of this agreement.
In this latest suit filed in Washington state court, Hightower claims it conducted an internal investigation in 2023 and 2024, which revealed that Knudsen diverted client funds from the firm to outside businesses. Notably, the firm claimed Knudsen directed over $30 million in client funds into 11 real estate venture LLCs he managed outside of the firm. (Knudsen’s wife was a member or manager, and Knudsen was a member of some of the LLCs, according to Hightower.)
Hightower also claimed Knudsen engaged in a pattern of “severe verbal abuse and bullying” and brought a gun into the office in violation of Hightower’s policy. (Knudsen has denied these accusations.) Hightower fired Knudsen in late February, according to this new complaint. Hightower then sued Knudsen, claiming he broke non-compete agreements with his former employer just weeks after being dismissed.
However, Knudsen retaliated with his own complaint in federal court, alleging Hightower “hijacks” advisors’ books of business before pushing those employees out to reap the rewards.
In addition to Hohimer Wealth Management as an entity, the defendants in the newest suit are Hohimer financial advisors Bryan Abdelnoor and Kyle Balcos and client service associate Hannah Atchison. Knudsen is not listed as an advisor on the firm’s site, nor is he SEC-registered with the firm, but Andrew Escobar, Knudsen’s attorney, confirmed he is with the firm. Hohimer Wealth did not respond to a request for comment.
In its suit, Hightower claimed Knudsen linked up with Hohimer “immediately” after he was fired and began “secretly colluding” with Abdelnoor, Balcos and Atchison.
“Put simply, Defendants made a plan to exploit the client relationships and confidential information Knudsen had been entrusted with at Hightower to bring those clients to Hohimer, to Defendants’ financial benefit at Plaintiffs’ expense,” the complaint read. “Knudsen and Defendants concealed their efforts from Plaintiffs.”
In March, Hightower claimed it sent a cease-and-desist letter to Hohimer Managing Partner David Hohimer detailing Knudsen’s firing and the allegations that led to it. The letter stated that he’d agreed to “certain post-termination restrictive covenants, which are in effect.” According to Hightower, Hohimer never responded to the letter.
According to Hightower, the alleged scheme is working; about 61 clients serviced by Knudsen on Hightower’s behalf have left for Hohimer, with a total value of $150,652,285. Hightower claimed the latest client defection occurred on Nov. 7 and said “multiple” clients have informed Hightower they’ve been contacted by Knudsen or other Hohimer officials arguing their money is “not safe” at Hightower.
“If any remaining clients are diverted away, Hightower will lose these relationships for years into the future,” he said. “The damages that flow from such occurrences are substantial.”
But Knudsen has argued in court filings that Hightower pressured him to retire while other advisors at his old firm disparaged him to clients to push him out. In a statement to WealthManagement.com, Escobar said there was “absolutely no 'collusion',” and argued Hightower “knowingly asserted” false claims, which would be sanctionable by the court.
“Hightower is simply trotting out many of the same tired allegations that have been either explained or wholly debunked in the prior litigation,” he said. “They can keep using this tactic of using the legal system to intimidate and bankrupt people like Lars, but they know they are wrong.”
In April, a state judge ruled that Hightower couldn’t distribute Knudsen’s Form U5 to anyone besides a regulatory authority and couldn’t disparage him to clients. Last month, Hightower dismissed claims in Illinois federal court against Knudsen, alleging he broke his non-solicitation vow days before a judge was set to rule on Hightower’s request for an injunction.
“The reason is obvious—Hightower knew that the magistrate judge was poised to deny its motion 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 would likely have invalidated Hightower’s agreements with dozens of advisors nationwide,” Escobar said. “Lars has no doubt that the Washington court will come to the same conclusion.”
Hightower declined to comment on this story, claiming it does not comment on pending litigation. The firm has previously said it would pursue its claims in “binding arbitration,” which Escobar expected to be settled by January 2025.
Knudsen also recently filed a complaint against the four principals at Bellevue Hightower, arguing they diverted funds from the firm to stop him from getting the compensation he was owed. That suit is ongoing. According to Escobar, they intend to file a motion for summary judgment in the arbitration in the coming weeks, with Escobar saying they are “confident" they’ll prevail.
