Many people will have been watching Tesco's recent debacle.

I have lost over £5000 with the share price fall, over the last 4 months.

Tough, you may say.

The reality is that I bought my shares based on the financial accounting data published by Tesco in their annual report.

Yesterday, I watched the new CEO Dave Lewis, parachuted in from Unilever.

He said the "accounting errors" appear to have been undertaken for several years.

They have declared £265 million in profits they actually don't have, and won't have.

A definition of fraud is:

" the intentional misrepresentation or concealment of an important fact upon which the victim is meant to rely, and in fact does rely, to the harm of the victim".

I'd say that is exactly what Tesco have done.

I'm tempted to issue a county court claim against them, for fraud.

Any thoughts, please?

Have a look on the FCA website, they might have some advice on what people in your position should be doing.

It was inevitable, they were always stretching 'the sales / profits envelope', you can't continue growing sales and showing profits up year on year. They were even showing profits through recessions. You could say 'they are catching up with themselves'.

Thank you both.

Just imagine if this was America and WalMart had done likewise. An enterprising lawyer might start a class action.

I researched Tesco properly. I'm a Yorkshireman and don't spend rashly.

The point is that the claims made in the annual report are now clearly false. They claimed non-existent profits.

We'll see how this pans out. There must be hundreds of thousands of people in my position.

'Google' see if there are other people in the same position, there might already be a group for you to join.

You just need to look ay what's happened with the banks and how much destruction they caused in such a short time.

get Warren Buffet to organise:-)look what hes lost

Thank you. You've helped me.

Clear now that there will be thousands of folks in my position.

Very likely that a class action group will form. I'll watch and wait.

I also hold shares, if a class action happens let people here know

Sean, your thread has been tweeted via the link from this site - it might also be worth having a look round Facebook to see if anyone has started a group.

Thank you all.

I think we'd need to know more about how and why the accounting problems have arisen. Presumably there will be an FCA investigation.

Do bear in mind that much of the fall has been due to Tesco's poor trading results (year-on-year sales down 4.6%, if I recall correctly) and not just the accounting irregularities.

It does make you wonder how they are going to manage their new Banking service if they cant get it right on the Retail business !

Yes FCA investigation under way,reported likely to pass results to police serious fraud

Allegedly, part of the accounting errors is they included invoices from suppliers as product that's already been sold. Although the product hadn't left their stores. It's false accounting.

I think we'd need to know more about how and why the accounting problems have arisen. Presumably there will be an FCA investigation.

 

 

Do bear in mind that much of the fall has been due to Tesco's poor trading results (year-on-year sales down 4.6%, if I recall correctly) and not just the accounting irregularities.

From reuters Friday

(Reuters) - Tesco Plc has been hit with a proposed class action lawsuit in the United States by investors over accounting irregularities at Britain's largest retailer.

The lawsuit was filed on Thursday in New York federal court, the same day the company reported a bigger than expected hole in its finances, prompting its chairman to resign.

The lawsuit was brought by Irving Fireman's Relief and Retirement Fund on behalf of purchasers of Tesco's American depository shares from Feb. 2 to Sept. 22.

The lawsuit accused Tesco and former executives, former Chief Executive Officer 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."

The lawsuit cited Tesco's surprise announcement on Sept. 22 that it had overstated first-half profits by 250 million pounds ($402 million).

The announcement prompted Tesco's American depository shares to fall 15 percent to $9.61 from its price the previous Friday, the lawsuit said.

A representative for Tesco declined comment.

The complaint did not reference Tesco's more recent announcement on Thursday that it had overall incorrectly booked income of 263 million pounds ($421 million), up from the original estimate of 250 million pounds.

Of the 263 million pounds, around 145 million came from prior years, Tesco said. A spokesman said on Thursday the figure was not big enough to require those previous results to be restated.

Britain's accounting watchdog, the Financial Reporting Council, said on Thursday it was looking into Tesco's announcement of accounting irregularities to determine whether it should take regulatory action.[

The case is Irving Firemen's Relief and Retirement Fund v. Tesco Plc, U.S. District Court, Southern District of New York, No. 14-8495.

Thank you very much for this theoldrouge.

Looks like I can watch and wait.

You really can't trust anyone in UK big business these days.

If it's not banks fiddling Libor it's Tesco fiddling their accounts.

They'll be including the profits from illegal drug use and prostitution in GDP figures next.

(Yes, I know).

My impatience has got the better of me. Probably not.

Having just spent 35 minutes on the phone to the most evasive, devious person I've ever spoken to, I decided to issue a moneyclaim online.

I phoned a manager in the financial accounting team at Tesco's Cheshunt HQ.

For the sake of £185 outlay, it will be worth getting Tesco into court.

Since it's the Small Claims track, I'll be liable for their attendance costs if I lose.

Having watched their CEO on tv, admitting to accounting errors, I'm 95% confident I'll win.

The Telegraph published this today:

Tesco has declined to comment on its findings, apart from confirming the shortfall was £263m and that the practices at the heart of the scandal had been going on for longer than the last six months.

The findings of the Deloitte investigation are now with the Financial Conduct Authority, the City regulator, which has pledged to launch a full investigation.

A source close to the probe said Tesco had booked supplier contributions that were conditional on hitting sales targets that it was not going to reach.

Seems to me to be a damning admission.

Wonder if I can issue a claim for damage done to the value of the shares I hold from when I was an employee

SFO to investigate Tesco now

http://www.fundweb.co.uk/news-and-analysis/uk/sfo-to-launch-criminal-tesco-probe/2015742.article

Yes.

Deloitte has been investigating for 5 weeks and, now their report is published internally, the matter has gone straight to the SFO.

Serious FRAUD Office.

I guess the clue is in the name.

I do wonder how this would all work. Tesco is a publicly traded company. Logically, if the decision is made to compensate shareholders for the drop in share price, the effect would be entirely circular and would simply cause a further drop in the share price - since any compensation would come from company funds.

This kind of class action tends to be used in the US when you have a publicly traded company which still has the majority of shares held by the founder or by a particularly large investor. I don't think thats the case in Tesco. I imagine the SFO probe is more likely to sanction individuals than Tesco plc itself (although I could be entirely wrong). Any fines paid by individuals will be a drop in the ocean compared to the 268million accounting issue.

The problem for Tesco is this:

http://www.legislation.gov.uk/ukpga/2000/8/part/VI/crossheading/compensation

The FSMA sec 90 seems very clear to me.

Great find, although I think s90 talks about listing particulars, which is what is submitted to the regulators when a private company wishes to become a listed company. The person liable would the 'sponsor' of the listing. I don't think that section applies to statements made about profit in the annual report.

The real concern should be any class actions raised launched in the US, damages are awarded in a totally different way to the uk, punitive damages.

http://en.wikipedia.org/wiki/Punitive_damages

Unrelated, but an example nevertheless.

http://www.ctvnews.ca/health/u-s-tobacco-company-hit-with-23-6b-in-punitive-damages-after-widow-s-lawsuit-1.1922027