TESCO – the shamed supermarket giant under criminal investigation by the Serious Fraud Office – is facing a double whammy of a wave of potential lawsuits from disgruntled institutional investors, and negative coverage from Warren Buffet’s £427m loss on its shares.
Currently five US law firms are already considering launching class actions against the supermarket chain after £263m of accounting irregularities were exposed in September.
Scott & Scott says it is liaising with a number of European investors such as asset managers and pension funds to determine whether to join a class action, reports the FT.
At the end of October, a proposed class action lawsuit in the US by investors over Tesco’s accounting irregularities was filed in a New York federal court.
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’.
Staying in the US, legendary investor Warren Buffett, who publicly declared that his investment in Tesco was a “huge mistake”, has recorded a $678m (£427m) loss on his investment in the grocer in just three months.
The Berkshire Hathaway billionaire – dubbed the Sage of Omah – who was Tesco’s fourth biggest investor, recently sold 75 million of his 322 million shares, taking his holding down by 0.98 percentage points to 3%.
Tesco has already suspended eight executives. On Monday, Tesco shares were up 4.45p at 188.9p.