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Legal action is being prepared claiming that Tesco’s profits overstatement last year caused a “permanent destruction of value to shareholders”.
The Connecticut-based law firm Scott & Scott, which has already filed a class action lawsuit in the US accusing the supermarket chain of misleading investors, is in “active discussions” with UK and other European institutions about pursuing a claim in London.
Scott & Scott is funding a UK law firm to represent the Tesco Shareholder Claims group to gather support for its case in Britain.
David Scott, the firm’s managing partner, said: “International institutions asked us to find a way to bring a claim in the UK which they can join.”
In September Tesco admitted it had overstated its half-year profits forecast by £250m ($371m, €340m). The company then increased the overstatement figure to £263m.
The immediate result was that Tesco’s shares hit an all-time low of 164.8p. The price has since recovered to about 246p. The potential plaintiffs maintain that without the accounting irregularities the company’s value and share price and would have been “materially higher”.
Similar claims were made last year by the UK firm Stewarts Law, which was seeking Tesco shareholders to support a case that they deserved compensation.
A second consequence of the profits overstatement was a fraud police investigation into Tesco’s accounting practices, which continues.
A third was the departure of several senior executives, including Patrick Cescau, a director closely involved in the replacement of the chief executive and chairman, who was the latest to leave.
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