Firm Files Securities Suit Against Tesco PLC for $500 Million Accounting Overstatement
October 7, 2015
The Firm filed suit on behalf of The Western and Southern Life Insurance Company, Western & Southern Financial Group, Inc., Integrity Life Insurance Company, and Touchstone Strategic Trust (collectively “Plaintiffs”) against Tesco PLC (“Tesco”), the largest retailer in the UK and third-largest retailer in the world. Plaintiffs’ claims arose from Tesco’s admitted overstatement of income over a multi-year period that amounted to at least $500 million according to Tesco’s current estimates.
The Complaint asserts Tesco overstated commercial income reported (but not earned) from Tesco’s suppliers and failed to timely record expenses associated with commercial income that was booked. Among other things, the Complaint describes facts that have emerged suggesting Tesco issued bogus invoices to suppliers, knowing full well that such invoices would be disputed and never paid, so that Tesco could report the amounts stated as “income” even though such practices are in direct violation of Tesco’s stated policies, the applicable accounting standards and the UK Groceries Supply Code of Practice (all of which Tesco reported that it adhered to at all relevant times). The massive accounting irregularities were first internally reported by a whistleblower who was summarily ignored by Tesco management. In the wake of the Tesco accounting scandal coming to light, multiple UK government agencies have initiated investigations against Tesco, including a criminal investigation by the UK’s Serious Fraud Office. In addition, at least 10 Tesco senior executives were fired, including its Chairman, CEO, CFO, and UK Managing Director.
The case was filed in the Southern District of Ohio and is entitled The Western and Southern Life Insurance Company, Western & Southern Financial Group, Inc., Integrity Life Insurance Company, and Touchstone Strategic Trust v. Tesco PLC, Case No. 15-cv-00658-SSB-SKB. A copy of the Complaint is available here.
A copy of an industry publication reporting on the lawsuit filing is available here.