Federal Judge Strikes Down Hightower's Non-Compete Agreement in California
From the desk of Jim Eccleston at Eccleston Law
A federal judge in Wilmington, Delaware, ruled against Hightower Advisors in its effort to enforce non-compete agreements against a former advisor in California who sold his firm to Hightower.
AdvisorHub reports that District Court Judge Richard G. Andrews barred Hightower from preventing Darren Reinig from operating a competing advisory firm. The judge found that California law invalidates non-compete agreements, undermining Hightower’s attempt to block Reinig from soliciting former clients. Reinig, who sold his practice to Hightower in 2019, launched a new advisory firm in February 2023.
However, Reinig’s legal battle is not over. Judge Andrews left the door open for Hightower to pursue claims for misappropriation of trade secrets.
According to AdvisorHub, Hightower argued that its non-compete provisions were enforceable under California law, which allows restrictions when a business has been sold. However, Judge Andrews determined that barring Reinig from working in investment advisory services nationwide was overly broad and unenforceable.
A Hightower spokesperson stated that the firm is evaluating its next steps and will continue arbitration proceedings, where it seeks a permanent injunction and damages.
Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.
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