By James Boxell
Tesco Plc is facing the threat of a shareholder damages claim in the U.K. over the 263 million-pound ($404 million) profit overstatement that plunged Britain’s biggest retailer into crisis last year.
A vehicle set up by U.S. law firm Scott & Scott to explore legal action in the U.K. and Europe said in a statement Thursday that it expects to issue a claim later this year. The group, Tesco Shareholder Claims Ltd, has hired a senior British lawyer, Philip Marshall, to provide advice.
“The case against Tesco is strong, and will involve a substantial claim,” the group said. It has signed up “various institutional investors” to join the compensation claim, though did not name them in the statement. Tesco declined to comment.
A British law firm, Stewarts Law, which has filed a number of cases against U.K. banks, began recruiting shareholders last November to join a possible suit against the retailer. In the U.S., the Texas-based Irving Firemen’s Relief and Retirement Fund filed a lawsuit against Tesco in October.
Last year’s profit overstatement prompted a wave of inquiries, including by Britain’s Serious Fraud Office. The company’s chief executive officer, Dave Lewis, who took over after the misreporting scandal, has since set out a radical plan to restore its fortunes after a series of profit warnings.