Tesco shareholders take legal action against food retailer

Tesco shareholders decided to take legal action against the food retailer after the troubled giant declared a £263m hole found in profits.

The action, conducted by Stewarts Law firm, will seek to establish that shareholders are entitled to compensation for losses caused by Tesco’s alleged breaches of the Financial Services & Markets Act arising from overstating its earnings.

Litigation firm Bentham Europe will fund the shareholders action which is expected to proceed within the next six months.

Tesco is currently being investigated by the Serious Fraud Office (SFO) after overstating its profits by £263m last month.

The Stewarts Law said it will allege that directors and senior management "knew or were reckless as to whether Tesco’s statements to the market were untrue or misleading and/or dishonestly concealed the true position".

John Walker, managing director of Bentham Europe, said: “Shareholders are justifiably concerned that Tesco has misrepresented its earnings resulting in material losses.

"We expect the legal claim to reveal the true extent of the problem and allow shareholders to seek compensation for harm suffered."

Sean Upson, partner at Stewarts Law, said: “We expect to issue proceedings against Tesco in the High Court in London within 6 months.

"We do not intend to wait for the outcome of the SFO investigation which may take some years.”

Shares in Tesco were down 1.81% to 189.9p at 12:03 on Tuesday.