Tesco staring at multiple lawsuits over accounting anomalies

UK supermarket leader Tesco is facing up to the possibility of concerted legal action over its £263 million profit mis-statement.

US law firm Scott & Scott is funding a group calling itself Tesco Shareholder Claims Ltd (TSC) to seek compensation from the supermarket chain after its profit mis-statement emerged last autumn causing a run on the company’s share prices.

City law firm Stewart's Law is already preparing a similar lawsuit, while another case is being brought against Tesco by a pension fund in Texas that had invested in the company’s US depositary shares.

The claims could potentially cost billions. At 10:15 on Tuesday, the company’s shares were down 1.25p or 0.51% at 245.35p. In the immediate aftermath of the alleged accounting impropriety, the share price fell as low as 164.80p.

A spokesperson for Scott and Scott told Sky News that it is soliciting interest from investors, including pension funds.

"A permanent destruction of value has occurred and had the accounting irregularities not taken place the share price, and value of the company, would today be materially higher. TSC expects the claim to be in the region of 50p to 70p per share. Tesco has in excess of eight billion shares listed," the law firm said.

Claimants are expected to seek compensation for shareholders on the basis that Tesco allegedly breached the Financial Services and Markets Act by overstating its profits. Tesco has declined to comment on proceedings so far.

The supermarket is also subject to an investigation by the Serious Fraud Office. Additionally, the UK Groceries Code Adjudicator and the Financial Reporting Council are undertaking separate inquiries into Tesco.