Arbitrators struck down Hightower’s attempts to enforce a non-compete clause against a Washington state-based advisor locked in a multi-year legal struggle with the firm.
In its decision, arbitrators wrote that Hightower’s non-compete clause (and subsequent attempt to revise its geographic restrictions) were “designed more to punish Knudsen than to advance Hightower’s legitimate business interests.”
In addition to striking down Hightower’s attempts to enforce its non-compete clause, arbitrators also denied the firm’s request for a preliminary injunction to enforce a non-solicitation agreement. Though arbitrators deemed the non-solicitation clause “reasonable and enforceable,” they surmised most customers covered by the rule “have likely already been solicited.”
In a statement, Knudsen said he’d been “clear from the start” that he wanted a quick resolution to the dispute with his former firm but felt Hightower had chosen to drag it on to punish him for taking his case into federal court (and later before arbitrators).
“This is a case that showcases Hightower’s vindictive behavior—threatening me with ongoing lawsuits and threatening my former clients with legal action all to hurt me,” he said. “But the real harm is to their reputation and to my clients that have been unnecessarily harmed by their actions. Frankly, what Hightower has done is shameful.”
According to Hightower’s Counsel Matt Henneman, a managing partner with Henneman Rau & Kirkin, Knudsen’s perspective on the panel’s decision was “at best, misleading.”
Henneman argued that the arbitrators rejected Knudsen’s attempt to invalidate the agreements under Washington state statute, and noted that the panel considered the non-solicitation agreement reasonable and that the decision of non-solicitation turned on the fact that most customers had already been reached.
“In light of the Panel’s Order explicitly confirming the available contractual monetary remedy, and its recognition of Knudsen’s admissions that he has already violated his obligations under the SPA, Hightower is confident of its ability to recover meaningful damages at the conclusion of the arbitration proceeding,” Henneman said.
According to legal filings, Knudsen founded Triad Wealth Management before transitioning the business into Hightower in 2014. Four years later, the principals at Hightower’s Bellevue branch (including Knudsen) opted for a new relationship, keeping them under Hightower but offering more autonomy (and ownership stakes).
The arbitration ruling details how Hightower claims it conducted an internal investigation in 2023 and 2024, allegedly learning that Knudsen diverted client funds to outside businesses, including $30 million to 11 real estate ventures he managed outside the firm.
Hightower also alleged Knudsen engaged in “severe verbal abuse and bullying” and violated Hightower’s policy by bringing a gun into the office (Knudsen has denied the allegations).
Knudsen was fired last year, and the firm later sued the advisor, claiming he was breaking non-compete clauses he’d signed with Hightower after the 2018 deal.
But Knudsen retaliated in federal court, arguing that Hightower “hijacks” advisors’ books of business before pushing them out the door (while keeping their clientele).
Last fall, Hightower dismissed a suit against Knudsen in Illinois federal court days before a judge would rule on an injunction demanding Knudsen follow the purported non-solicitation vow. At the time, Hightower said they were opting to pursue the case “in binding arbitration.”
However, Hightower also filed a suit against Hohimer Wealth Management, the firm where Knudsen eventually went to work after leaving Hightower.
In the suit, Hightower claimed the RIA conspired with Knudsen (who was not named as a defendant) to steal confidential client information, allegedly costing Hightower $150 million in client assets. The case is ongoing in Washington State Court.