Tesco is facing the prospect of another legal challenge over its accounting scandal after lawyers called on retail investors to back fresh action against the supermarket chain.
Rosenblatt Solicitors is urging shareholders to step forward and support the move, claiming that the current compensation package outlined by the financial watchdog does not extend far enough. In fact, the city law firm said the amount should be greater than the current £85 million pot because the supermarket giant had been ‘releasing inaccurate financial information for much longer’ than the period covered by the Financial Conduct Authority (FCA).
This is the latest blow for Tesco which is already facing legal action from a group of institutional investors who claim to have lost in excess of £100 million as a result of the fiasco. Managing Partner at the law firm, Tania MacLeod, said: ‘We believe the FCA compensation scheme does not extend far enough…What is beyond doubt is that, even on the findings of Tesco's own investigation, the reporting of its financial information was overstated long before August 29 2014 and thus there is a likelihood that investors bought stock at inflated prices going back to at least 2013.’
Back in March the FCA said that Tesco had committed market abuse when it overstated profits by £263 million in a trading update on August 29 2014. It concluded that Tesco's share price was inflated as a result, meaning investors had paid a higher price and were entitled to claim compensation if they bought shares and bonds on - or after - the 29th of August and had held stock when the financial statement was corrected on the 22nd of September 2014.