TESCO’S SEEMINGLY unstoppable rollercoaster of doom continues to plumb new depths as it faces a proposed class action lawsuit in the US by investors over its accounting irregularities.
It was filed on Thursday in a New York federal court, on the same day that the beleaguered grocer reported an even bigger hole in its finances – £263m instead of its initial estimate of a quarter of a billion pounds.
The lawsuit was lodged by Irving Fireman’s Relief and Retirement Fund on behalf of purchasers of Tesco’s American depository shares from 2 February to 22 September, reports Reuters.
It accused Tesco and former CEO Philip Clarke and ex-CFO Laurie McIlwee, of making false and misleading statements and failing ‘to disclose the truth regarding the company’s financial condition.’
Citing Tesco’s 22 September announcement that it had overstated first-half profits by £250m, the lawsuit led Tesco’s American depository shares to plummet 15% to $9.61 from its price a week previously.
The complaint made no reference to Tesco’s announcement on Thursday – following the conclusion of the Deloitte probe – that its overstatement was worse than previously stated at £263m.
Tesco chairman Sir Richard Broadbent has already announced plans to step down, following mounting pressure.
The FCA has already begun its own full investigation and the FRC “is giving careful consideration” to the situation. Further probes will focus on how the income adjustments took place over a period of time.
Tesco has already suspended eight executives – who will remain in limbo while the FCA conducts its wide-ranging probe into the black hole.
The case is Irving Firemen’s Relief and Retirement Fund v. Tesco Plc, U.S. District Court, Southern District of New York, No. 14-8495.