Press Statement
Bentham Europe and Stewarts announce today that over 125 institutional funds have filed a claim for damages against Tesco PLC (Tesco) for well in excess of £100 million over alleged breaches of the Financial Services & Markets Act in relation to over-statement of earnings.
The legal action will seek to prove that Tesco made misleading statements to the stock market that omitted material information and which were relied on by investors when making investment decisions.
On 23 October 2014, Tesco announced it had previously over-stated its profits by £263 million. The announcement, which was accompanied by a 92 per cent drop in interim profits, cut a further c. £1 billion from Tesco’s market capitalisation (which had already reduced by c. £2 billion following the initial disclosure to the market in September 2014).
Jeremy Marshall, Chief Investment Officer of Bentham Europe, said:
“The misstatement of profits leading to a dramatic collapse in the Tesco share price caused substantial damage to many shareholders who manage money for thousands of investors.”
“Investors have a right to rely on statements made by companies to ensure that they correctly allocate capital. 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.”
Sean Upson, the partner at Stewarts leading the case, along with Andrew Hill said:
“Tesco has misstated its accounts, and in particular its treatment of payments from suppliers, to give the appearance of static trading margins. The reality was that those margins were falling. Institutional investors were therefore misled when making investment decisions in respect of Tesco. This is precisely the type of wrongdoing which the Financial Services and Markets Act was designed to redress and therefore to prevent”.
The UK’s Serious Fraud Office has charged three former Tesco executives over the accounting scandal alleging that the men acted dishonestly by giving a false account of the commercial income earned by Tesco Stores and a false account of the financial position of Tesco. Christopher Bush, who was Tesco’s UK managing director; Carl Rogberg, former UK finance director; and John Scouler, who used to be UK commercial director for food, will stand trial at Southwark Crown Court in September 2017.
Press coverage so far:
BBC – Tesco hit with £100m damages claim
CNBC – Institutional funds file 100 million pounds damages claim against Tesco
The FT – Tesco faces £100m civil lawsuit over profit misstatement (Subscription required)
The Telegraph – Tesco hit with £100m legal claim over accounting scandal
The Guardian – Tesco faces £100m claim from investors over accounting scandal
Retail Week – Tesco investors file damages claim for over £100m after accounting scandal
City AM – Tesco faces £100m damages claim from investors over the overstating of its profits
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Media contact: Lydia Buckingham, Senior Marketing Executive, +44 (0) 20 7822 8134, lbuckingham@stewartslaw.com
