Some 125 institutional funds have filed a damages claim for more than 100 million pounds against British supermarket Tesco relating to its 2014 profit overstatement, the group coordinating the legal action said on Monday.
Bentham Europe, which provides financial backing for group claims, said the legal action would seek to prove that Britain’s biggest retailer breached the law by making misleading statements to the stock market that omitted material information and which were relied on by investors when making investment decisions.
“The claim will assert that Tesco’s misstatements are in clear breach of its obligations under the Financial Services & Markets Act and investors must be compensated,” said Jeremy Marshall, Bentham Europe’s chief investment officer.
A Tesco spokesman declined to comment on Bentham Europe’s statement.
Tesco issued a statement to the Stock Exchange on Sept. 22, 2014, saying that during its final preparations for an interim results announcement it had identified a 250 million pound overstatement of first-half profit, mainly due to booking commercial deals with suppliers too early.
The discovery led to the suspension of eight senior members of staff, sent Tesco’s shares tumbling and plunged the company into the worst crisis since Jack Cohen founded the business nearly 100 years ago.
Three former senior executives of Tesco accused of fraud and false accounting in relation to the profit overstatement will stand trial in September next year.
Christopher Bush, 50, who was managing director of Tesco UK, Carl Rogberg, 49, who was UK finance director, and John Scouler, 48, who was UK food commercial director, were charged by the Serious Fraud Office (SFO) on Sept. 9 with one count of fraud by abuse of position and one count of false accounting.
Last November Tesco agreed to pay $12 million to settle a U.S. shareholder lawsuit. The retailer denied wrongdoing in agreeing to settle.