Mike Ashley settles lawsuit against Morgan Stanley

Mike Ashley’s Fraser’s Group has dropped a $50bn (£40bn) lawsuit against Morgan Stanley, with no money exchanged by either parties, after the retail tycoon accused the bank of “snobbery” over a nearly $1bn (£797m) margin call.

In a statement to The Financial Times, Morgan Stanley said: “Frasers Group plc and Mr Michael Ashley have both withdrawn their claims against Morgan Stanley on terms which do not involve any payment of monies by any party to any other. Frasers, Mr Ashley and Morgan Stanley confirm that the disputes between them are therefore resolved.”

Reports that Mike Ashley launched a legal claim against Morgan Stanley first emerged in August 2022, with allegations that 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 claimed that Morgan Stanley “intended to harm” Frasers by indirectly forcing it to transfer Hugo Boss stock options.

Ashley’s shares in the luxury brand were 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 claimed 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”. 

Frasers has been contacted for comment.