Morgan Stanley expert won't admit he doesn't support Mike Ashley's $1 billion bid

Frasers, founded by Mike Ashley, is seeking £40 million in damages from Morgan Stanley for allegedly lost trading profits. Photo: Chris J. Ratcliffe/Bloomberg

A Morgan Stanley expert witness conceded that his analysis did not support the bank's decision to make a $1 billion cash demand against Mike Ashley.

At the last stage of the trial in the High Court. in which Morgan Stanley was accused of «snobbery», Bernard Minsky was asked during cross-examination whether he had done work that would justify the huge sum.

Mr Minsky told the court: «I didn't do it no «.

The bank issued a so-called margin call on Ashley's trading of Hugo Boss shares in 2021. The expert, joint global head of financial services company Marex Prime Services, said the figures used to reach $1 billion were much higher than he would have thought. used to limit the risk associated with adverse changes in share prices.

Mr Ashley claims that Morgan Stanley tried to force him to close his position in Hugo Boss shares, which the bank denies.

Mr. Minsky said that as a «rough» estimate, the amount of margin required would be based on a potential 200% increase in the company's share price.

In contrast, Morgan Stanley's calculations were based on a theoretical Hugo Boss share price up 400%.

He said: “We're looking for the difference between the amount of collateral available and the size of the loss. Where we have such a gap, we need additional collateral. I did it and learned to do it.”

The exchange gets to the heart of the matter. Mr Ashley, who is seeking £40 million in damages, claims the figures used by Morgan Stanley were arbitrary and linked to personal grudges against him.

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Mr. Minsky was also questioned over allegations that Morgan Stanley bankers didn't know whether the 400 PC stress test was appropriate.

A former Goldman Sachs banker said: “If you have any margin tools, I personally would like understand how we do it and why we do it. This is my position.”

Experts provided by Frasers said a 400% rise in Hugo Boss's share price was so unlikely that it would likely only happen once every 26,000 to 1.4 million years.

Frasers lawyers say that Morgan Stanley's $1 billion cash demand was much higher than normal for the banking industry, noting that HSBC only required $100 million in collateral when it later took responsibility for the Hugo Boss deals.

The owner of Sports Direct claims Morgan Stanley was motivated by snobbery and a personal grudge against Mr Ashley.

Frasers is seeking €47m (£40m) from Morgan Stanley in compensation for allegedly losing trading profits and by transferring trades with rival lender HSBC.

Morgan Stanley rejects the claim as far-fetched and unfounded, arguing that the cash requirement was designed to protect against losses from wild swings in Hugo Boss shares.