Morgan Stanley criticised over late evidence in $1bn Ashley case

MORGAN STANLEY has been criticised for failing to hand over evidence in its $1bn legal battle over Mike Ashley’s share dealings.

The High Court is seeking answers from the Wall Street banking giant after it claimed to have belatedly found a document relating to its $995m (£783m) margin call against the retail billionaire.

This is the latest twist in Frasers Group’s €50m (£43m) case against Morgan Stanley, which is accused of “arbitrarily” and “incorrectly” closing out bets on Hugo Boss stock, losing the listed company millions in the process.

Morgan Stanley forced through its margin call from Frasers via Danish investment bank Saxo Bank in May 2021, as it sought cover against Mr Ashley’s stake in Hugo Boss. The US bank enforced the margin call after rejecting the British businessman’s offer of putting £100m and his entire £1.9bn Frasers’ stake up as collateral.

Legal wrangling has now led to Morgan Stanley disclosing a key document to Frasers which, for years, it said did not exist. The document relates to how margin calls should be imposed at the bank, according to legal documents seen by The Telegraph. Details of Morgan Stanley’s alleged blunder emerged at a pre-trial hearing last Friday, with Frasers claiming it had been “led up the garden path” by the bank. Frasers said it was only notified of the document’s existence last week. Morgan Stanley is still fighting to keep it confidential.

Camilla Bingham KC, Morgan Stanley’s lawyer at the hearing, said the bank understands Frasers’ “frustration” but played down the document’s importance, claiming it is no “game changer”.

However, Adrian Beltrami KC, acting for Frasers, said this response was “inadequate”. He said: “The document on the face of it, whether a game changer or not, is a material document that comes late in the day.”

The High Court told Morgan Stanley it must now provide a full explanation for its late disclosure at a further pretrial hearing next week. Morgan Stanley declined to comment.

The coming hearing will also pile scrutiny on the Clifford Chance partner representing Morgan Stanley, who allegedly failed to identify the document while reviewing evidence.

Frasers has already raised concerns over the actions of Clifford Chance’s lawyers and allege they breached court rules by interfering in the preparation of expert witness statements.

Clifford Chance denies such wrongdoing. The case continues.