Tesco settles US lawsuit over accounting scandal
Tesco will pay $12m to settle legal action by US shareholders which claimed last year that accounting irregularities inflated the supermarket’s share price.
Tesco PLC today announces that it has reached agreement in principle to settle a class action commenced in New York on behalf of the holders of the Company’s American Depositary Receipts, which represent approximately two per cent of the total issued ordinary shares of the Company.
The class action was against the Company and certain of its former directors and alleged breaches of certain U.S. federal securities laws in connection with the overstatement of commercial income which was announced in September 2014.
The cash settlement was disclosed on Wednesday in the US District Court in Manhattan and requires court approval.
This agreement, if confirmed, will settle one of two claims before US courts arising out of the commercial income overstatement. The other claim is brought in Ohio by the remaining holders of ADRs equivalent to less than 0.2% of the total issued ordinary shares of the Company.
The lawsuit claimed that Tesco and top executives misled investors into believing the company was performing well, when it was instead reporting profit incorrectly, taking too long to recognise costs, and overstating inventory.
