J.P. Morgan Seeks Contempt Charge Against Ex-Advisor
J.P. Morgan Securities filed a motion Tuesday to hold Christopher J. Lee, a former advisor, in contempt of court for allegedly violating a temporary restraining order that barred him from soliciting clients on behalf of Morgan Stanley, his new employer.
The motion, which was filed in the Supreme Court in the State of New York, was followed Wednesday by the judge’s order to show cause for contempt, requiring Lee to appear in court on Sept. 23 to explain his actions.
In the contempt motion, J.P. Morgan claims Lee emailed JPM clients after the TRO was in place, sending them a “blatant sales pitch, numerous Morgan Stanley Smith Barney marketing materials, and promises to ‘follow up.’ These clients were never ‘his’ clients to take; they are JPMorgan clients whom Lee serviced and/or learned of only through his employment.”
“The record demonstrates Mr. Lee brazenly disregarded the Court’s order and continued to engage in solicitation of JPMorgan’s clients. We trust the Court will see the facts similarly and dispense consequences accordingly,” said Pablo Rodriguez, spokesperson for J.P. Morgan Wealth Management.
In an affidavit filed in support of the contempt motion, Richard Weinhaus, executive director at JP Morgan, said that the clients Lee emailed were pre-existing clients of JPMorgan or its affiliate bank, not clients that he brought over from his previous brokerage.
A spokeswoman for Morgan Stanley did not return a request for comment by press time.
J.P. Morgan had requested the temporary restraining order after advisors Lee and Joseph Minaudo left their New York branch for Morgan Stanley earlier this year. The firm claims the two violated their post-employment restrictive covenants in place by soliciting J.P. Morgan clients.
“One client (a husband and wife) informed JPMorgan that Minaudo was putting on a ‘full court press’ to get them to move their accounts to him at Morgan Stanley,” according to the petition for injunctive relief. “Specifically, Minaudo told them that he would waive Morgan Stanley’s management fees if they moved their accounts to him.”
The petition said the advisors managed about $1.85 billion in assets under management when they left the bank, and that the vast majority of their clients were either pre-existing JPM clients at the time they were assigned to them or JPM Chase clients that the bank associates referred to them.
In Weinhaus’s affidavit, he said that before the TRO was issued, about 50 households, representing $175 million in assets, moved to Morgan Stanley. After the TRO was issued, an additional 180 clients with more than $375 million in assets transferred over.
