Mike Ashley has claimed he was a victim of “abuse” when US investment bankers “grotesquely” imposed a $1 billion cash call on his Frasers Group. The tycoon is suing Morgan Stanley and Denmark’s Saxo Bank over a margin call made in 2021 that was linked to options over shares in the German retailer, Hugo Boss.
Lawyers for Frasers Group told the High Court in London that the American bank made the cash demand allegedly to produce “the forced eviction or close-out of Frasers’ open positions in Hugo Boss shares”.
Saxo Bank and Morgan Stanley deny the claims, with barristers for the American bank telling the judge that the allegations were “divorced from the legal and factual reality”. Giving evidence, Ashley criticised Morgan Stanley for having acted “grotesquely”.
When asked by the bank’s lawyer, Camilla Bingham KC, if Ashley agreed with his lawyers’ claims that Morgan Stanley had exhibited “snobbery” towards him, the 59-year-old businessman replied: “I do believe that there is an element of that, yes.”
The counsel for the bank then asked whether Ashley saw himself as a victim. “I am a victim of Morgan Stanley’s abuse,” he replied from the witness box.
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Frasers Group, which was known as Sports Direct International until 2019, owns a range of companies, including House of Fraser, Game, Jack Wills, Sports Direct and Missguided.
Ashley was the group’s chief executive at the time of Morgan Stanley’s cash call, which amounted to a requirement to increase the amount of equity in an account. But he stepped down from the role in 2022, although Ashley remains as the group’s majority shareholder.
In written submissions to Mr Justice Bryan, Adrian Beltrami KC, representing Frasers Group, had said that Morgan Stanley’s “erratic behaviour” was “at least partly the result of snobbery” towards Ashley.
Ashley’s legal team argued that this attitude was fuelled by a personal dislike of the former owner of Newcastle United FC on the part of a Morgan Stanley banker. That dislike, said Beltrami, was “class-driven” and the result of viewing Ashley as an “upstart”.
Beltrami said the margin call “simply became the vehicle by which Morgan Stanley would enforce that which it was otherwise not entitled to require, namely the total removal of the trades from Morgan Stanley’s books”.
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The move resulted in Saxo Bank, which acted as a broker, asking Frasers Group to pay $900 million, something that Ashley’s counsel said would have been “disastrous” for the company. The High Court blocked the request in 2021.
Bingham told the court in written submissions for Morgan Stanley that Frasers’ claims were ”not grounded in any form of recognisable legal or factual reality” and that it had “embarked on lawfare against Morgan Stanley on an extraordinary scale” despite suffering “no true loss”.
The hearing is scheduled to conclude next month, with judgment expected at a later date.
