More than 125 institutional investors have sued Tesco Plc, seeking in excess of £100 million ($122 million) over the UK 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% to 211 pence at 2.48 p.m. in London trading.
Tesco announced in September 2014 that it had overstated profits by £263 million – a figure that was increased to £326 million following an independent audit.
The misstatement led to a “dramatic” collapse in Tesco’s share price, and investors “must be compensated”, according to Jeremy Marshall, chief investment officer at Bentham Europe.
Three former Tesco executives are due to stand trial in September 2017 for falsifying accounting records.
In November, the retailer settled a US class-action lawsuit also related to the profit overstatement, for $12 million.
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