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Tesco: Shareholder Right of Action

By National Practice Group Leader, Dispute Resolution

Yesterday Tesco took the drastic step of suspending four senior executives after it emerged that the company overstated its expected first-half profits by £250 million.

After the extraordinary miscalculation emerged, Tesco shares fell by 11.6% to 203p, the lowest share price since March 2003, with over £1.5 billion wiped off the retailer market value of the company.

With Tesco now calling in independent accountants and lawyers to try to determine how the miscalculation occurred, many shareholders may be questioning if they have a legal right of action against Tesco for the massive loss to their investments.

While the relevant facts in relation to Tesco have yet to emerge, investors can take action against a company if they suffer a financial loss as the result of negligent accounting practices by company employees. Any compensation awarded would include damages for the loss suffered, calculated with reference to the expected share price, and interest.

Such legal actions are common in the U.S., however due to the complex nature of the process it is important that investors in the UK take specialist legal advice.

If you have any questions about your legal position in light of the recent developments at Tesco, call Slater and Gordon's Group Litigation Lawyers  24/7 on freephone 0800 916 9015 or contact us online.

For details about the advantages of group litigation see Group Litigation Explained.

Craig McAdam is a Group Litigation Lawyer at Slater and Gordon in Manchester.

Slater and Gordon Lawyers are a nationwide law firm with offices in London, Manchester, Liverpool, Birmingham, Sheffield, Milton Keynes, Bristol, Merseyside, Cambridge, Edinburgh, Cardiff, Halifax, Newcastle, Wakefield, Derby & meeting rooms in Bramhall, Cheshire.

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