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Mike Ashley’s Frasers Group has dropped its €50mn lawsuit against Morgan Stanley ahead of a judgment in the London case that saw the British retail tycoon accuse the Wall Street bank of “snobbery”.
Frasers withdrew the lawsuit in recent days, with no money exchanged by the parties, according to a spokesperson from Morgan Stanley. The about-turn from Frasers comes after a trial that concluded in March.
“Frasers Group plc and Mr Michael Ashley have both withdrawn their claims against Morgan Stanley on terms which do not involve any payment of monies by any party to any other,” the US bank said in a statement. “Frasers, Mr Ashley and Morgan Stanley confirm that the disputes between them are therefore resolved.”
Ashley declined to comment. A spokesperson for Frasers did not respond to requests for comment.
The litigation related to a $1bn margin call Morgan Stanley made to cover derivative positions in fashion group Hugo Boss that the UK retailer held via its broker Saxo Bank, which in turn used the bank for execution and clearing.
The retailer claimed that the evidence suggested Morgan Stanley’s decision to impose the margin call was “at least partly the result of snobbery”, and that the bank rejected it as an investment banking client in April 2021 because of one of the banker’s feelings towards Ashley.
Frasers, which owns Sports Direct as well as the eponymous department store chain, claimed that Morgan Stanley imposed the margin call without warning, leading Saxo Bank to demand $900mn from Frasers.
Morgan Stanley claimed it did not know who stood behind the trades when it made the margin call.
During the trial, which began in February this year, Ashley told London’s High Court that no amount of collateral would have satisfied the bank.
He said the margin call was a “shock” that left him and colleagues at Frasers “drained”. The positions were ultimately transferred via other institutions, led by HSBC, which Ashley said was “instrumental in avoiding a disaster”.
Ashley, the former owner of Newcastle United Football Club, is among the City’s most colourful characters. He started as the owner of a single sports shop in Maidenhead in 1982 and went on to build Frasers into a group valued at £3.7bn. He handed the reins of his retail empire to his son-in-law, Michael Murray, in 2022.
Ashley once held a drinking competition and vomited into a pub fireplace to “huge applause from his management team”, according to evidence given in a separate lawsuit he successfully fought in 2017 over allegations he owed £14mn to a Merrill Lynch banker.
