Chris Lee twist in adviser lawsuit

High-profile stockbroker and commentator Chris Lee’s connection added spice to debate about a court case in which an investor successfully sued his financial adviser.

In Armitage v Church, pensioner Neil Armitage sued his adviser Carey Church and was awarded nearly $70,000 after investments in several finance companies including Bridgecorp lost money.

Without a Word of a Lie can reveal that, after leaving Mrs Church, Mr Armitage went to Mr Lee for advice.

Justice Robert Dobson ruled Mr Armitage was 25% “contributorily negligent” for the decisions to invest in finance companies that led to the loss, and said, “I am then not satisfied on the balance of probabilities that competent advice would have been followed in full.”

According to the judgment, Mr Armitage, was, by October 8 2007, corresponding with another financial adviser and was planning re-investment in other finance companies, once he had withdrawn money from the ING investments made on Mrs Church’s recommendations.

Without a Word of a Lie has seen affidavit evidence naming Mr Lee as the other adviser, although his name wasn’t mentioned in the judgment.

By this point Mrs Church was recommending against finance company debentures but Mr Armitage commented in an email:

“I am also concerned about your recommendation not to invest in debentures for the next 12 months.

“There are finance companies which had the foresight to plan for tight trading times, have credible ratings, excellent management, good quality loan books, high levels of liquidity and good credit facilities.”

Finance industry sources have pointed to the involvement of Mr Lee – who had recommended a number of finance companies to his clients – as further evidence of Mr Armitage’s appetite for that form of investment.

Institute of Financial Advisers president Nigel Tate described the switch from Mrs Church to Mr Lee as “a bit like stepping out of the frying pan and into the fire.”

Mr Lee recently discussed the Armitage versus Church case in the “Taking Stock” blog on his website, without mentioning his personal link to Mr Armitage.

When contacted by The National Business Review, Mr Lee said, “we would never discuss who is and who is not our client with the media.”

He wasn’t willing to discuss his views on the case publicly.

Mr Lee, who has raised the hackles of some in the finance industry with his forthright commentary, underwrote his investors’ losses to the tune of nearly $1 million after a company he’d recommended, Provincial Finance, went into receivership in 2006.

A source said, “After Provincial he just carried on with North South Finance, Strategic Finance, Hanover before it went under, South Canterbury Finance… about the only one he didn’t recommend was Bridgecorp.”

Mrs Church is appealing the judgment. The appeal is likely to be heard early next year, her lawyer Brian Henry told NBR.