Stichting NL Tesco (“Foundation” or “TESCO PLC Investor Claims Foundation”) seeks to provide shareholders of Tesco PLC (“Tesco” or “Company”) and Tesco itself, with an out-of-court solution to resolve the past disclosure errors that resulted in economic losses associated with shareholders selling their Tesco securities (CUSIP: 881575302; ISIN numbers: GB0008847096 (symbol “TSCO”) and US8815753020 (symbol “TSCDY”)), at a loss (i.e., less than the purchase price), between 22 September 2014 and 20 April 2015.
This Foundation seeks to streamline the organisation of the material facts, the measure of damages suffered by shareholders that sold their Tesco securities at a loss, and to open a dialogue with Tesco’s new management and PricewaterhouseCoopers.
The shareholder dispute arises from Tesco’s announcement that its prior management concealed material accounting errors at Tesco, one of the world’s three largest grocery and general merchandise retailers based in the United Kingdom with locations throughout the United Kingdom, Asia, and Europe (Czech Republic, Hungry, Poland, Slovakia, Turkey, and Republic of Ireland). It is premature to conclude PricewaterhouseCoopers’ role in the alleged accounting errors.
It is alleged that Tesco engaged in a complex accounting ploy whereby it masked its deteriorating profit margins through the use of misrepresentations concerning its accounting practices, in violation of International Financial Accounting Standards (“IFRS”) reporting requirements by:
- recognizing premature and fictitious commercial income;
- delaying accrual of costs;
- overstating inventory; and
- misrepresenting its “trading profit” and “underlying profit”.
Absent its wrongful accounting practices, Tesco would have reported materially lower profits and even losses during the Class Period (the specific period of time in which the unlawful conduct occurred), e.g., lower investment quality and corresponding share price.