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Tesco opens £85m compensation scheme for misled investors

The retail giant will reimburse shareholders and bondholders who said they invested under 'false or misleading terms'.

Tesco opens £85m compensation scheme for misled investors

Tesco (TSCO) has opened an £85 million compensation scheme for investors who said they invested in the company under ‘false or misleading terms’ following the group’s admission that it overstated expected profits.

The compensation deal, which was previously announced at the end of March, was agreed with the Financial Conduct Authority (FCA).

It will compensate investors who were net purchasers of Tesco shares or certain Tesco listed bonds between 29 August 2014 and 19 September 2014.

Each net purchaser of shares will be entitled to compensation of 24.5p per share purchased, plus interest at 1.25% a year if the net purchaser is an institutional investor or 4% a year if the net purchaser is a retail investor.

Tesco has appointed KPMG to administer the compensation scheme, with oversight from the FCA.

Commenting at the time of the announcement in March, FCA chief executive Andrew Bailey said: ‘Dissemination of information that gives a false or misleading impression as to traded securities harms the integrity of our markets.

‘Tesco and its board are doing the right thing here, taking appropriate responsibility and agreeing to rectify the consequences of the misconduct. 

‘They have cooperated fully with us and this sets a good example for the market and so is a good outcome for Tesco and investors.’

In a trading update in September 2014, Tesco said that it expected profit in the first half to be around £1.1 billion.

Within a month however the group admitted that it had ‘identified an overstatement of its expected profit for the half year, principally due to the accelerated recognition of commercial income and delayed accrual of costs’.

4 comments so far. Why not have your say?

Donald Chan

Aug 23, 2017 at 18:16

So, what about investors who retained their shares on the basis of such misleading information?

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M C Harvey via mobile

Aug 23, 2017 at 21:16

More money for old rope under our mad compensation culture.

Still, it shows Tesco is a decent company.

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bar chid

Aug 24, 2017 at 13:13

Donald, you are asking a very pertinent question, why did they settle on such a small time frame ?

Tesco's debacle was a slow motion car crash with considerable deceit over an extended time scale, this should have been recognised by the FCA

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Donald Chan

Aug 24, 2017 at 14:36

Thanks, bar child. Not sure if there is a path to pursue.

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