Bank’s $1bn demand ‘risked Ashley’s entire business’

MIKE ASHLEY’S entire retail business empire was put at risk by Morgan Stanley’s demands for $1bn (£780m), his lawyers have claimed.

The Wall Street bank was alleged to have been in a “palpable sense of panic and disarray” before making a cash-call to cover Mr Ashley’s $250m bets on Hugo Boss stock in May 2021.

In written closing arguments at the High Court, Mr Ashley’s lawyers claimed that Morgan Stanley wanted his company, Frasers Group, to abandon its share price bets because of a “panicked desire to avoid criticism” for overlooking the trades.

Frasers argued that Morgan Stanley’s own witnesses have confirmed that the bank’s internal risk controls were “ineffective” after the trades were allowed to build up over weeks without being noticed.

The Sports Direct owner argued this “apparent carelessness” was especially embarrassing for Morgan Stanley given the lender was reeling from $911m of losses linked to the collapse of Archegos months earlier.

In the final stages of Frasers’ two and a half-week case against Morgan Stanley, parties yesterday provided their closing submissions to the High Court before the judge makes his final decision. Frasers has argued that Morgan Stanley’s cash-call was an unlawful abuse of power and was motivated by snobbery and a personal animus towards Mr Ashley.

His lawyers told the High Court: “Had Frasers been unable to move the Boss positions, and had Morgan Stanley closed them out, that would have put Frasers’ into default, placing its entire business – and the livelihoods of its thousands of employees – at risk.”

Morgan Stanley has rejected the claim as contrived and without merit, arguing that the bank was well within its rights to demand cash to protect against volatile movements in Hugo Boss stock.

In its written closing arguments, Morgan Stanley claimed that the lawsuit was instead motivated by the retailer’s “irritation” for previously being turned down as a client.

Morgan Stanley also argued that Frasers wanted to “punish” the bank for enforcing a cash-call that its billionaire owner could have ultimately paid.

Morgan Stanley also questioned why Frasers didn’t call key witnesses to provide evidence during the trial, including its former finance chief, Justin Barnes. Morgan Stanley’s lawyers said: “Frasers’ conspiracy claims should never have seen the light of day.”

The case continues.