Frasers Group Drops $1 Billion Lawsuit Against Morgan Stanley Over Margin Call Dispute

This margin call was tied to Frasers' investment activities around German fashion giant Hugo Boss.

British retail magnate Mike Ashley’s Frasers Group has officially withdrawn its lawsuit against Morgan Stanley concerning a contentious $1 billion margin call, according to a spokesperson from the Wall Street bank.

Frasers had initially pursued a claim for approximately 47 million euros ($50.5 million) following Morgan Stanley’s demand for collateral in May 2021.

This margin call was tied to Frasers’ investment activities around German fashion giant Hugo Boss.

Mike Ashley, who Forbes estimates to be worth $5.1 billion, expressed his dismay during a February trial at London’s High Court, stating that the margin call had left him in “total shock”.

However, before the court could issue a judgment, Frasers opted to discontinue its legal challenge.

A spokesperson for Morgan Stanley provided a statement on the resolution: “Frasers Group plc and Mr Michael Ashley have both withdrawn their claims against Morgan Stanley on terms which do not involve any payment of monies by any party to any other.

Frasers, Mr Ashley, and Morgan Stanley confirm that the disputes between them are therefore resolved.” Frasers did not respond immediately to inquiries for further comment.

The lawsuit’s backdrop involved allegations by Frasers that Morgan Stanley modified the rationale for its $915 million margin call upon discovering Frasers’ role behind the scenes in trades managed by Saxo Bank.

Frasers contended that Morgan Stanley’s personnel perceived Ashley as an “upstart” and leveraged the margin call to manipulate the trading situation, partly motivated by elitism.

In contrast, Morgan Stanley maintained that its actions were purely procedural, emphasizing that its direct contractual obligations were with Saxo Bank and not Frasers.

The firm defended the margin call as a necessary measure to shield itself from potential losses tied to stock market fluctuations.

This legal skirmish unfolded in the shadow of the Archegos Capital collapse, which occurred just two months prior to the disputed margin call and resulted in a substantial $911 million loss for Morgan Stanley.

Separately, Saxo and Frasers had reached a settlement before the commencement of the trial.