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Mike Ashley has reportedly launched a legal claim against Morgan Stanley, alleging the investment bank acted in “bad faith” over trades made by Ashley to build his stake in Hugo Boss.
According to This is Money, court documents claim that Morgan Stanley “intended to harm” Frasers by indirectly forcing it to transfer Hugo Boss stock options.
Ashley’s shares in the luxury brand are said to be owned through Frasers and held through a “complex” series of contracts which give Ashley overall control of them.
However, a margin call on the shares, imposed by the bank, was said to have cost Frasers money, with court papers stating Morgan Stanley took “recklessly indifferent” action.
According to This is Money, the court papers claim that “attempting to force such a trade was based on the incorrect assumption that Frasers would behave as an ‘activist’ to agitate for changes at Hugo Boss, despite assurances it would not”.
The papers added that the margin call would have caused “significant commercial and reputational damage” for Frasers, while leading to “unwarranted speculation as to Frasers’ financial position”.
Court papers further revealed that Ashley offered £100m in cash and his entire £1.9bn Fraser’s stake in collateral to avoid the margin call, and this offering was refused.
In light of this, Frasers was reportedly forced to close out or transfer some of Ashley’s share options in Hugo Boss.
In a statement to This is Money, verified by Retail Sector, a Morgan Stanley spokesperson said: “We believe this claim is contrived and without merit, and we will defend it vigorously.”
Frasers Group has also been contacted for comment.
