Sports Direct owner Mike Ashley has slammed Morgan Stanley (NYSE:MS) bankers in court over a near US$1 billion margin call imposed on his retail firm Frasers Group PLC (LSE:FRAS) in 2021.
Accusing the bank of snobbery, Ashley told London’s High Court on Monday that he was left in “total shock” at the $915 million (£720 million) call over Frasers’ position in Hugo Boss.
“It was like a nuclear bomb hitting Slough,” he said, with the Wall Street bank having imposed the margin call - to shield from possible losses - on May 25, 2021.
Frasers is suing Morgan Stanley (NYSE:MS) for around €47 million (£40 million) in a two-week trial over the incident, claiming the move saw it lose out on trading profits.
Frasers lawyer Adrian Beltrami said Morgan Stanley (NYSE:MS) only acted on the trades, which were carried out by Saxo Bank from 2019 when it discovered Frasers was behind them.
Frasers had built the stake in Hugo Boss through Saxo, which then brought in Morgan Stanley to execute and clear the trades.
Saxo ultimately demanded funds from Frasers on the back of the call, which Ashley claims was based on unmerited views of him as an “upstart”.
Morgan Stanley defended the call, saying in court that it came at a time of concern over large positions in single stocks.
Hedge fund Archegos Capital had collapsed two months prior to the margin call in 2021, seeing Morgan Stanley lose over US$900 million.
“This is exactly the type of concentration we need to be worried about,” Greg Basso, from the bank's counterparty risk division, had said at the time.