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Regulation Amp Governance
US law firms line up to sue Tesco
From the Financial Times of Sun, 09 Nov 2014 08:50:52 GMT

US law firms are lining up investors willing to sue Tesco, following the discovery of significant accounting irregularities at the UK supermarket.

US law firm Scott & Scott says it is in talks with several European institutional investors about filing legal claims against Tesco after it emerged in September that the retailer had misstated its profits by £263m.

Disclosure of the accounting error triggered a 12 per cent drop in Tesco’s share price to 203p, the lowest level for 11 years. The share price has since dipped lower, to 185p.

David Scott, a partner at the law firm, said: “There has been a tremendous amount of interest both in the US and among UK investors in obtaining more information about [Tesco claims].

“I have spoken to asset managers and pension funds in the UK and on the continent. Several European clients are asking us to look at their holdings and determine where the best forum for them to file a class action would be.”

Investors that bought Tesco’s US depository shares can join an existing lawsuit filed in the country at the end of October on behalf of the Texas-based Irving Firemen’s Relief and Retirement Fund.

At least five US law firms published notices online last week highlighting the class action suit and encouraging other investors to consider filing similar claims.

The lawsuit accuses Tesco, its former chief executive Philip Clarke and ex-chief financial officer Laurie McIlwee of making false and misleading statements and failing to “disclose the truth regarding the company’s financial condition”.

Tesco declined to comment.

Investors that bought Tesco shares in the UK are not eligible to join the Irving class action but could file a collective class action under UK law. Mr Scott said his firm was speaking to English solicitors about working together to represent investors in that category.

David Seidel, chief executive of the Institutional Investors Tort Recovery Association, which helps institutions decide which class actions to join, said he expected European investors to be less willing than their US counterparts to file claims against Tesco.

“You have to have litigation funding and damage-based agreements and deal with insurance – that takes time. Litigation has always been a four-letter word in the UK,” he said.

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