A group of US investors in UK supermarket chain Tesco has filed a lawsuit against the company over the accounting practices that led it to
overstate earnings by £263m
(US$414m) and has triggered doubts over the figures reported in earlier years.
The suit was issued two days after the UK’s largest retailer, issued its fourth profit warning since July. Tesco warned that full-year earnings would miss analysts’ expectations by around £500m, briefly sending its share price down to a 15-year low.
The lawsuit, seeking class-action status, was filed in New York on 10 December by the Chester County Employees Retirement Fund. It alleges that senior executives “violated provisions of the Exchange Act by disseminating false and misleading press releases, financial statements, and statements during investor conference calls.”
Another group of US shareholders, the Irving Fireman’s Relief and Retirement Fund, announced in October that it was launching its own suit against the company. That month also saw the UK’s Serious Fraud Office (SFO) open a criminal investigation into the accounting practices that led Tesco to book commercial revenue before recognising the associated costs.
An article about Tesco’s problems is in the latest issue of
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