Group of 124 British institutional funds claim they lost millions after supermarket mis-stated profits by at least £250m. Tesco is facing a claim of more than £100m in damages by a group of investors who say the supermarket made misleading statements to the stock market.
The group of 124 British institutional funds, who say they lost millions of pounds after Tesco mis-stated profits two years ago, are involved in the claim filed by law firm Stewarts Law at the high court in London on Monday.
The action is being funded by Bentham Europe, a group that specialises in funding litigation and is ultimately controlled by US activist hedge fund Elliott Management.
It will aim to prove Tesco made misleading statements to the stock market that omitted material information and on which investors relied when making investment decisions. Jeremy Marshall, the chief investment officer of Bentham Europe, said: “The mis-statement of profits, leading to a dramatic collapse in the Tesco share price, caused substantial damage to many shareholders who manage money for thousands of investors.
“Investors have a right to rely on statements made by companies to ensure that they correctly allocate capital. The claim will assert that Tesco’s mis-statements are in clear breach of its obligations under the Financial Services and Markets Act and investors must be compensated.”
Stewarts Law began soliciting disaffected shareholders to support joint action against Tesco in November 2014, shortly after more than £2bn was wiped off the supermarket’s value when it admitted in September 2014 that profits had been artificially inflated by at least £250m.
The accounting scandal has led to several investigations and threatened legal action against Tesco.