Mike Ashley’s Frasers Group drags Morgan Stanley boss to court seeking £50m in damages
Mike Ashley’s Frasers Group has dragged the chief executive of Morgan Stanley into a UK legal battle over a $1bn (£814m) margin call regarding Hugo Boss trade.
In a New York court filing lodged earlier this week, seen by The Telegraph, the retail group asked the court to make James Gorden hand over documents and a testimony for its UK court case which is set to go to trial in February.
Frasers, which was founded by retail tycoon Mike Ashley, is seeking £50m worth of damages from the banking group, after it claimed the bank acted “arbitrarily” and “incorrectly” when it closed out bets on Hugo Boss stock, losing the company millions as a result.
Ashley, which is known for building up stakes in businesses he regards as undervalued, once had a 4.3 per cent in the fashion brand but that has since been cut to 3.9 per cent.
The Sports Direct founder said that Morgan Stanley wrongly treated the company like a “family-office investment vehicle because of Mr Ashley’s large stake”.
Ashley is alleged to have offered up £100m and his entire £1.9bn Frasers’ stake in collateral to meet the margin call – the demand from a company’s brokerage firm to increase the amount of equity in an account – but this offer was refused.
Frasers has now asked the US Courts to compel the baking chief to testify and provide documents for the case.
An expert from the filing read: “[Frasers wants] to understand the extent to which the decisions to impose and maintain the Margin Call were driven (either directly or indirectly) by Mr Gorman”.
“To date, Morgan Stanley has denied that [Mr Gorman] had any involvement in the matter and has not called him as a witness despite his plain importance to the English proceeding.
City A.M has contacted Frasers Group and Morgan Stanley for a comment.