Litigation funder Bentham Ventures has agreed to fund legal action on behalf of Tesco shareholders. The claim, proposed to be conducted in London by leading commercial litigation law firm Stewarts Law, 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.
In October, Tesco announced that recent profit overstatements totalled £263m, wiping over £2bn from Tesco’s share price. The supermarket further downgraded its expected profits for the current financial year significantly and reported a fall of 92% in pre-tax profits.
The action will claim that Tesco has made misleading statements and omissions to the market in relation to its profits for recent financial periods. This alleged conduct has resulted in, amongst other things, the ongoing suspension of numerous senior Tesco executives and investigations by lawyers, a forensic accounting firm, the Financial Conduct Authority and now the Serious Fraud Office.
All current and former shareholders who acquired at least 10,000 Tesco shares during the period 17 April 2013 to 22 October 2014, and who had not sold all of those shares prior to the market announcements made by Tesco on 29 August, 22 September or 23 October 2014, are eligible to participate in the proposed action.
The managing director of Bentham Europe, John Walker said: “The overstatement of earnings has caused significant harm to Tesco’s shareholders who bought shares since 17 April 2013. 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”.
In order for the claim to proceed a sufficient number of shareholders will need to join the action.
More information about the proposed legal action is available at www.benthameurope.com.