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(Alliance News) - Frasers Group PLC on Thursday said it was seeking damages of GBP50 million from Morgan Stanley in a dispute over a margin call covering trades in Hugo Boss AG.
The owner of Sports Direct has asked a New York court to order Morgan Stanley Chief Executive James Gorman to hand over evidence for the British retailer's High Court lawsuit.
This follows the launch of proceedings in the High Court in London relating to a disputed margin call made by Morgan Stanley in May 2021 on Saxo Bank, in connection with certain put and call options in Hugo Boss which were ultimately held by Frasers.
Saxo sought to pass the margin call through to Frasers. Frasers successfully sought and obtained injunctive relief in June 2021 preventing the banks taking any steps in connection with the margin call.
Frasers considers Morgan Stanley to have acted unlawfully in making and maintaining the margin call and now seeks damages for its losses from Morgan Stanley in the region of approximately EUR50 million. There is no counterclaim against Frasers.
The Financial Times said according to the retailer's US filing, Morgan Stanley imposed an unnecessary USD995 million margin call on Frasers' options in May 2021, forcing the retailer to incur losses of about EUR50 million as well as other costs from transferring the trades to other brokers.
The report said Frasers alleges that the move was an attempt by certain individuals at the bank to harm the company, and that the decision to impose the margin call was "arbitrary, capricious, in breach of good faith, far from market practice, and a breach of contract", according to the filing.
Morgan Stanley has argued in the English court proceedings that its decision was "based on objective indications of risk" and stress testing in accordance with the bank’s standard practices, according to Frasers' filing.
Shares in Frasers rose 2.0% to 813 pence in London on Thursday while shares in Morgan Stanley fell 3.6% to USD85.81 in New York. Hugo Boss shares closed 3.0% lower at EUR64.20 each in Frankfurt.
By Jeremy Cutler, Alliance News reporter
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