Frasers Group has requested a New York court to demand Morgan Stanley's CEO, James Gorman, to produce evidence relevant to a lawsuit it initiated against the bank in 2021. The case pertains to an almost $1bn margin call on trades in Hugo Boss, which Frasers alleges was handled "arbitrarily" and "incorrectly" by Morgan Stanley.
In documents filed with the court and seen by The Telegraph, Frasers seeks to understand the extent of Mr. Gorman's involvement in decisions regarding the margin call. The retail group claims that Mr. Gorman, who has been at the helm of Morgan Stanley since 2010, should testify and produce documents related to the case.
The dispute originates from a margin call made by Morgan Stanley in May 2021 on Saxo Bank, concerning certain put and call options in Hugo Boss held by Frasers. Morgan Stanley allegedly tried to force Frasers to close these options positions, causing significant losses for the retailer. Saxo Bank attempted to pass the margin call through to Frasers, but the retailer successfully obtained injunctive relief in June 2021, preventing the banks from taking any steps related to the margin call.
Frasers is seeking €50m ($58m) in damages from Morgan Stanley for losses incurred due to what it terms as an "unnecessary" $995m margin call. The retailer argues that Morgan Stanley treated it like a family-office investment vehicle due to Mike Ashley's large stake in the company.
Reportedly, Ashley offered £100m ($136m) and his entire £1.9bn ($2.6bn) stake in Frasers as collateral to meet the margin call, but his offer was rejected.
Frasers' allegations also suggest that Morgan Stanley's scrutiny of its business with family offices heightened after the collapse of Archegos Capital Management. According to the retailer, this led to Morgan Stanley's prime brokerage investigating and removing "family-office type" businesses, which contributed to the bank's "unusually hostile attitude" towards Frasers' Hugo Boss position.
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