Monday 31 October 2016 3:21 pm

Tesco faces £100m damages claim from investors over the overstating of its profits

Supermarket chain Tesco is facing a £100m damages claim from investors after the firm overstated its earnings in 2014.

Bentham Group, which is providing the financial backing for the group's claim, said today that 125 shareholders are involved in taking action against the supermarket when it overstated its profits by £263m.

The legal action will seek to prove Tesco made "misleading statements to the stock market that omitted material information and which were relied on by investors when making investment decisions," Bentham Europe said.

"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," said Jeremy Marshall, Bentham Europe's chief investment officer.

In October 2014 Tesco announced it had ovestated its profits by £263m, and there had been a 92 per cent drop in its interim profits. This was later revised upwards to £326m when it included previous accounts. Auditors found this was because of Tesco booking payments from suppliers before the money was due to be paid.

This led to the suspension of eight members of staff and a huge crash in Tesco's shareprice. Billions were wiped off the supermarket's value.

The Serious Fraud Office has already charged three former Tesco employees of fraud and false accounting.

Christopher Bush, 50, the former managing director of Tesco UK, Carl Rogberg, 49, former UK finance director and John Scouler, 48, former UK food commercial director, will all stand trial next September. They have pleaded not guilty to all charges. 

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