Tesco faces further accounting scandal legal challenge
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 the current compensation package outlined by the financial watchdog "does not extend far enough".
The city law firm said the amount should be greater than the current £85 million pot because the company had been "releasing inaccurate financial information for much longer" than the period covered by the Financial Conduct Authority (FCA).
The supermarket giant 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.
Tania MacLeod, managing partner at the law firm, 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."
The FCA said in March 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 - August 29 and had held stock when the financial statement was corrected on September 22 2014.
The financial regulator said each net buyer of shares over the period would be entitled to 24.5p per share purchased, alongside interest of 1.25% per year if the buyer is an institutional investor and 4% per year if the buyer is a retail investor.
The compensation scheme is being handled by KPMG and is due to open on August 31 this year.
However, Rosenblatt Solicitors said it was "yet to be determined" whether the compensation "is fair or reasonable" and "only covers a small window of time".
Tesco Stores - a subsidiary of the supermarket chain - also entered a deferred prosecution agreement (DPA) with the Serious Fraud Office (SFO) earlier this year over the accounting scandal, which saw it pay a £129 million penalty and costs.