Chicago-based Hightower Holdings has withdrawn a complaint and a request for an injunction against a former financial advisor, WealthManagement reports.
Hightower had filed a lawsuit in Illinois federal court in March against Lars Knudsen from Washington state, accusing him of diverting funds, stealing company secrets and violating a non-compete clause. He had been fired from the firm the previous month. The company alleged that Knudsen had created a hostile work environment through bullying and verbal abuse of employees and had also brought a gun into the office in violation of company policy.
The lawsuit against Knudsen came after he and his firm filed their own suit against Hightower. Knudsen alleged that the firm “hijacks” advisors’ books of business and corners them into signing legally unenforceable restrictive covenants before pushing that advisor out on pretextual grounds. He also accused Hightower of running a disinformation campaign against him.
Recently Hightower dropped its claims against Knudsen, days before a judge was scheduled to rule on the enforceability of the contract provisions. Its notice to the judge said that all claims before the court were voluntarily dismissed without prejudice. But the company said it will continue to pursue its case against Knudsen before an arbitrator.
In reaction to Hightower’s decision, Knudsen claimed the firm took the action over concern it would lose the case in court and expressed concern over the financial toll the matter has taken.
“I firmly believe that Hightower feared the strong possibility that the court would rule in my favor, supporting my claim that the non-compete and other covenants of their contract with me were overly broad and lacking any enforceable standing before the court,” Knudsen said in a statement. “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.”
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.”
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