Sports Direct founder Mike Ashley pursuing a legal claim against investment bank Morgan Stanley
Trading: Mike Ashley wanted to accumulate his stake in Hugo Boss
Sportswear tycoon Mike Ashley is pursuing a legal claim against investment bank Morgan Stanley.
The Sports Direct founder’s company Frasers alleges the bank acted in ‘bad faith’ over trades he made to construct his stake in fashion giant Hugo Boss which is now value £770million.
His shares within the German brand are owned through Frasers – and held through a posh series of contracts which put Ashley in overall control of them.
Court documents claim Morgan Stanley ‘intended to harm’ Frasers by not directly forcing the firm to transfer Hugo Boss stock options.
The imposed ‘margin call’ on the shares cost Frasers money and Morgan Stanley motion was ‘recklessly indifferent’, the papers say.
They are saying attempting to force such a trade was based on the wrong assumption that Frasers would behave as an ‘activist’ to agitate for changes at Hugo Boss, despite assurances it might not.
Imposing the margin call would have caused ‘significant business and reputational damage’ for Frasers, and led to ‘unwarranted speculation as to Frasers’ financial position’, Ashley’s lawyers argue.
His group has been linked with a takeover of Hugo Boss, but has firmly denied the rumours.
Its products are sold in his Flannels and House of Fraser stores.
Court papers reveal Ashley offered £100million in money and his entire £1.9 billion Frasers’ stake in collateral to avoid the margin call, however the eye-watering package was refused.
Frasers was forced to shut out or transfer a few of his share options in Hugo Boss.
Denmark’s Saxo Bank, an intermediary through which Frasers built its stake in Hugo Boss, has also been listed as a defendant.
A Morgan Stanley spokesman said: ‘We imagine this claim is contrived and without merit, and we are going to defend it vigorously.’
Frasers Group and Saxo Bank were each contacted for comment.