JPMorgan Says Ex-Advisor Defied Court Order In $1.85B Breakaway Fight

J.P. Morgan Securities is asking a New York judge to hold one of its ex-advisors in civil contempt, arguing he kept soliciting his old clients by email for weeks in violation of a temporary restraining order tied to his move to Morgan Stanley.

The wirehouse filed the contempt motion yesterday in New York County Supreme Court against Christopher Jung Lee, one of two advisors who resigned from JPMorgan on May 29 and immediately joined Morgan Stanley. Lee and the other advisor, Joseph Minaudo, together serviced roughly 1,350 households and $1.85 billion in assets at JPMorgan, according to a memorandum of law filed in support of the motion.

Both men are named as respondents in the underlying case, but the contempt motion is aimed at Lee alone. JPMorgan’s filings do not accuse Minaudo of violating the restraining order.

According to the memorandum, JPMorgan sued the pair on June 3, seeking a court order to preserve the status quo while a related arbitration proceeded before the Financial Industry Regulatory Authority. Both advisors had signed agreements with one-year, post-employment bans on soliciting JPMorgan clients.

Justice Lyle E. Frank granted a temporary restraining order on June 5, barring Lee and Minaudo from directly or indirectly “soliciting, attempting to solicit, inducing to leave or attempting to induce to leave” any JPMorgan client they had serviced, or any client whose name they learned through their JPMorgan employment, with narrow carve-outs for family members and clients they had formally served as broker of record at a prior firm, the memorandum said.

JPMorgan said Lee ignored it. Attempts to reach Lee by press time were unsuccessful. He is now managing director of New York City-based TruCore Advisors at Morgan Stanley Wealth Management, where he focuses on global sports and entertainment clients.

According to an affirmation filed by Leonard Weintraub, an attorney who represents JPMorgan, Lee emailed six JPMorgan clients between June 8 and June 24, well after the restraining order took effect, attaching anywhere from four to 11 Morgan Stanley marketing brochures to each message. These covered topics from tax-loss harvesting and family office services to international wealth management and currency trading. “There is no indication that any of the clients requested such materials,” JPMorgan’s memorandum said.

JPMorgan also said his emails all followed a similar script. “As mentioned, after careful consideration, our team made the decision to join Morgan Stanley based on their technology and robust wealth management platform,” Lee allegedly wrote to one client on June 12, in language he largely repeated in messages to four other clients over the following two weeks, each promising a follow-up call.

In a June 8 email to a client identified in the filing only as “E.W.,” Lee allegedly was more explicit, the memorandum said: “Once you’ve had a chance to review the different products, solutions and resources our team will now be able to provide for clients, we’re sure you’ll understand why we made the transition.”

The financial stakes described in the filings are substantial. Before the restraining order, about 50 of the households Lee served at JPMorgan, holding roughly $175 million in assets, had already moved to Morgan Stanley, according to an affidavit from Richard Weinhaus, a JPMorgan executive director who supervised Lee. In the roughly three weeks between the restraining order and June 29, when a Finra arbitration panel entered a stipulated injunction addressing permanent injunctive relief, more than 180 additional households, with more than $375 million in additional assets, transferred to Morgan Stanley, Weinhaus said.

Weinhaus’s affidavit also describes clients complaining directly to JPMorgan about Lee’s persistence. One client, identified as “D.S.,” told the firm on June 17 that Lee had been calling him daily to try to move his account. Another client, identified as “M.E.,” told JPMorgan that Lee called him on June 9, after already calling on May 31, the day after Lee resigned.

To win a contempt finding under New York’s Judiciary Law, JPMorgan must show the restraining order was a lawful, unequivocal mandate; that Lee disobeyed it with reasonable certainty; that he knew about it; and that JPMorgan was prejudiced as a result. JPMorgan’s memorandum of law argues all four elements are met by clear and convincing evidence, noting that its counsel served the order on Lee’s attorney by email the same day it was signed. The firm is asking the court to sanction Lee and to require him to reimburse its attorneys’ fees and costs.

A proposed order scheduling a hearing on the motion carries a standard but pointed warning for Lee: that the purpose of the proceeding is to punish him for contempt of court, with punishment that “may consist of fine or imprisonment or both according to law,” and that failure to appear could result in his arrest. JPMorgan is also seeking permission to take expedited discovery ahead of the hearing, including deposing Lee and taking a forensic image of his personal electronic devices.

“The record demonstrates Mr. Lee brazenly disregarded the Court’s order and continued to engage in solicitation of JPMorgan’s clients,” said Pablo Rodriguez, a spokesperson for J.P. Morgan Wealth Management, in an email. “We trust the Court will see the facts similarly and dispense consequences accordingly.”