Frasers sues Morgan Stanley for £50 million in Hugo Boss damages

Mike Ashley’s retail group, Frasers, has filed a New York court to order Morgan Stanley’s Chief Executive, James Gorman, to produce evidence in a 2021 UK lawsuit.

In the UK lawsuit, Frasers claimed that the bank acted "arbitrarily" and "incorrectly" by trying to force the retailer to close options positions it had built in Hugo Boss, losing the company millions as a result. Frasers is therefore pursuing against the bank over an almost £820 million ($1 billion) margin call, covering trades in Hugo Boss.

According to the Telegraph, Morgan Stanley demanded £810 million ($995 million) from Frasers in May 2021. This amount was issued to back up positions the company had built in the German fashion house’s stock.

Mike Ashley is reported to have offered up £100 million and his entire £1.9 billion Frasers’ stake in collateral to meet the margin call but had his offer refused.

The retail giant has a long history of buying up shares in companies he deems to be undervalued, as well as rivals in the retail sector, such as Boohoo and Asos.

The lawsuit claims that the New York-based bank wrongly treated the company like a family-office investment vehicle because of Ashley’s large stake in the business. The company pointed to comments made by James Gorman before the margin call, where he said the company would "certainly be looking hard at family-office type relationships".

Frasers is ordering a US court to compel Gorman, who has helmed Morgan Stanley since 2010, to appear in court and produce documents in the case.