An alliance of 125 shareholders have filed a £100 million-plus lawsuit against Tesco over the 2014 accounting scandal.
entham Europe, the London-based litigation firm that is leading the legal action, said the lawsuit was a bid to prove that country‘s largest supermarket retailer “made misleading statements to the stock market that omitted material information and which were relied on by investors when making investment decisions”.
In 2014, Tesco had suspended eight directors and came under investigation by the Financial Conduct Authority (FCA) and the Serious Fraud Office (SFO) when it emerged that the company had inflated profits.
The news sparked a £2 billion slump in its market cap and in October that year, Tesco recorded a 92 per cent plummet in interim profits.
It also confirmed that the profit overstatement was £263 million – wiping a further £1 billion off its value and Sir Richard Broadbent resigned from his post as chairman over the scandal.
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Bentham Europe chief investment officer Jeremy Marshall said the scandal led to a “dramatic collapse” in Tesco share price, causing “substantial damage” to shareholders who manage funds for investors.
“Investors have a right to rely on statements made by companies to ensure that they correctly allocate capital,” Marshall said.
“The claim will assert that Tesco‘s mis-statements are in clear breach of its obligations under the Financial Services & Markets Act and investors must be compensated.”
Tesco has declined to comment on the submission of the legal claim.
This year, the SFO charged three former Tesco executives over the accounting scandal. The organisation alleged that former finance chief Carl Rogberg, former managing director Chris Bush and former food commercial head John Scouler never rectified inflated income figures for the supermarket chain.
The trio are expected to appear in court in May next year for a plea hearing before being tried in September.