Mike Ashley has accused Morgan Stanley of dropping a “nuclear bomb” on his business with a demand of £790m that he claims was motivated by snobbery.
Lawyers accused the investment bank of a “class-driven” decision when it attempted to force Frasers Group to abandon bets on the share price of Hugo Boss in 2021, The Telegraph reported.
In court filings quoting bank staff, Frasers said Ashley, who was then CEO, was viewed as an “upstart”, who would have “zero respect to the norms of the way in which we do business”.
The group said that Morgan Stanley’s negative reaction when Ashley tried to become a client was “class driven, no doubt about it”.
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Frasers is currently suing the investment bank for £40m over alleged costs and lost trading profits, which it claims is due to Morgan Stanley changing the purpose of a £790m margin call after discovering that the group stood behind trades held by Denmark’s Saxo Bank.
Ashley told a High Court judge that Morgan Stanley’s sudden demand for £790m of collateral in May 2021 was “completely unbelievable”.
He said: “You might as well have said a nuclear bomb landed in Slough – it couldn’t happen. You’re in total shock.”
The retail empire claims that Morgan Stanley’s actions cost the group millions of pounds.
Morgan Stanley has rejected the claim as contrived and without merit. It argues it had no contractual relationship with Frasers, only with Saxo.
The bank said the margin call, based on a potential 400% rise in Hugo Boss shares, was designed to ensure it was properly protected from exposure to stock market bets.
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