Mike Ashley hit with 14 million pound lawsuit by former US employee

London - Mike Ashley, the billioniare owner of Sports Direct, is being sued by former Merrill Lynch banker Jeff Blue for 14 million pounds for breaching an agreement.

In court documents seen by the Guardian, Blue claims he boosted Sports Direct reputation in the City, and highlighting the exit of US investment bank Merrill Lynch as corporate broker to Sports Direct to underline the changes that should be undertaken. The former banker, who officially left his role at Sports Direct last year, claims that Merrill Lynch resigned from its role at the sportswear retailer in the fall of 2012, after share purchases made in August breached financial regulations. "In autumn 2012, Merrill Lynch withdrew from acting as Sports Direct’s corporate broker," said Blue in court filings.

"Merrill Lynch did so as a result of concerns that it had regarding Sports Direct’s corporate governance, including the propriety of Sport Direct’s decision in August 2012 to fund the Sports Direct Employee Benefit Trust to buy-back shares for the benefit of Sports Direct’s employee share scheme, without complying with the Buy-back and Stabilisation Regulation as would ordinarily be required by a buy-back of shares by the Sports Direct itself."

At the time, the investment bank are said to have raised concerns that Sports Direct had offered funding to employee benefit trust to purchase more than 20 million pounds of share from employees who have been awarded them as part of a bonus scheme and wanted to cash them in. However, this move breaches City rules, as companies must inform the market in advance if they wish to purchase their own shares, and are not allowed to purchase more than a quarter of the shares traded on a normal day.

If the share has not been purchased by the employee trust, then Sports Direct may have had to offer them to the wider market, there by lowering its company share price. Blue, Sports Direct former strategic development director, claims that Ashley breached an agreement made to pay him a 15 million pounds bonus if the company's share price increased more than 800p, a deal he failed to honour as shares in Sports Direct rose as high as 922p in April. However, following a growing list of public scandals and issue, Sports Direct share price has dropped down to 300p.