Some Tesco Investors File Lawsuit After Accounting Errors

By Ed Ballard

LONDON--A group of Tesco PLC (TSCO.LN) investors has filed a lawsuit against the company over the accounting practices that led to an overstatement of 263 million pounds ($414 million) of the beleaguered grocer's earnings.

The suit comes two days after Tesco, the U.K.'s largest retailer, issued its fourth profit warning since July, saying full-year earnings would miss analysts' expectations by around half a billion pounds. Shares briefly touched 15-year lows.

The lawsuit, seeking class-action status, was filed in New York on Wednesday by the Chester County Employees Retirement Fund. It alleges that senior executives "violated provisions of the Exchange Act by disseminating false and misleading press releases, financial statements, and statements during investor conference calls."

Another group of U.S. shareholders, the Irving Fireman's Relief and Retirement Fund, announced another suit in October. That month also saw the U.K.'s Serious Fraud Office opened a criminal investigation into the accounting practices that led Tesco to book commercial revenue before it recognizing the associated costs.

A Tesco spokesman declined to comment.

Write to Ed Ballard at [e-mail]

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