Tesco Investors Sue U.K. Retailer Over 2014 Accounting Scandalby
Claim relates to 326 million-pound profit overstatement
Action filed in U.K. by more than 125 institutional investors
More than 125 institutional investors sued Tesco Plc, seeking in excess of 100 million pounds ($122 million) over the U.K. grocer’s 2014 profit overstatement.
The funds allege that Tesco made misleading statements to the stock market that omitted material information, according to Bentham Europe, the company funding the lawsuit. Tesco officials couldn’t immediately be reached for comment.
The litigation is an unwelcome distraction for Chief Executive Officer Dave Lewis, who wasn’t in charge when the accounting scandal took place, as he seeks to rebuild Tesco’s battered reputation as well as its profits amid an industry price war.
The company’s shares fell 2.2 percent to 211 pence at 2:48 p.m. in London trading.
Tesco announced in September 2014 that it had overstated profits by 263 million pounds, a figure that was increased to 326 million pounds following an independent audit.
The misstatement led to a “dramatic” collapse in Tesco’s share price and investors “must be compensated,” Jeremy Marshall, chief investment officer at Bentham Europe, said in the statement.
Three former Tesco executives are due to stand trial for falsifying accounting records in September 2017.
In November, the retailer settled a U.S. class-action lawsuit also related to the profit overstatement for $12 million.