Sports Direct founder Mike Ashley files lawsuit against investment bank Morgan Stanley
Trading: Mike Ashley wanted to build his stake in Hugo Boss
Sportswear magnate Mike Ashley files a lawsuit against investment bank Morgan Stanley.
Frasers, the company of the founder of Sports Direct, alleges that the bank acted in bad faith over transactions it made to build its stake in fashion giant Hugo Boss, which is now worth £770 million.
Its shares in the German brand are owned by Frasers – and are held through a complex series of contracts that give Ashley overall control over them.
Court documents allege Morgan Stanley “intended” to harm Frasers by indirectly forcing the company to transfer Hugo Boss stock options.
The imposed margin call on the shares cost Fraser money and Morgan Stanley’s action was “recklessly indifferent,” the papers say.
They say any attempt to force such a swap was based on the mistaken assumption that Frasers would act like an “activist” to agitate for change at Hugo Boss, despite assurances that it wouldn’t.
The imposition of the margin call would have caused “significant commercial and reputational damage” to Frasers and led to “unwarranted speculation about Frasers’ financial position,” Ashley’s lawyers say.
His group has been linked to a takeover of Hugo Boss, but vehemently denies the rumours.
The products are sold in its Flannel and House of Fraser stores.
Court documents show Ashley pledged £100m in cash and his entire £1.9bn Frasers stake to avoid the margin call, but the eye-watering package was declined.
Frasers was forced to close or transfer some of his stock options in Hugo Boss.
The Danish Saxo Bank, an intermediary through which Frasers built up his stake in Hugo Boss, is also on the defendant’s list.
A Morgan Stanley spokesman said: “We believe this claim is contrived and unfounded, and we will defend it vigorously.”
Frasers Group and Saxo Bank were both approached for comment.