Frasers Group PLC (LSE:FRAS) founder Mike Ashley has settled a US$50 million lawsuit with Morgan Stanley (NYSE:MS) after claiming “snobbery” was behind a disproportionate margin call by the bank.
Ashley had argued a request for over US$1 billion in collateral was “arbitrary”, after the Wall Street bank called for the cash to cover the risks of his firm buying into Hugo Boss in 2021.
He had sought damages of US$50 million (almost £40 million), arguing the move to cover a potential fall in Hugo Boss’ share price was an attempt to force Frasers to abandon its position in the luxury retailer.
The terms of the settlement were not disclosed, but mean no judgement will be passed on the case in London’s High Court following hearings in February.
Morgan Stanley (NYSE:MS) had been seeking to cut exposure to potentially risky investments at the time, after losing out when New York-based Archegos defaulted on a margin call in relation to a bet on US media group ViacomCBS.
Though Morgan Stanley (NYSE:MS) dismissed Ashley’s lawsuit, questions have since been asked of the bank’s risk processes.
Ashley’s Frasers had claimed that it was unaware trades placed with Saxo Bank in relation to Hugo Boss were ultimately carried out by Morgan Stanley brokers.