The Irving Firemen’s Relief and Retirement Fund, of Irving, Texas filed a lawsuit on Thursday against retail giant Tesco.
The fund says it suffered heavy losses when Tesco stock fell after the firm admitted it had overstated its profits.
From Bloomberg:
Tesco Plc (TSCO) and its directors misled investors about its financial health, according to a Texas retirement fund that sued the U.K.’s biggest retailer just as it’s facing an onslaught from rival European companies.
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The Irving Firemen’s Relief and Retirement Fund, of Irving, Texas, alleged that it bought Tesco stock at artificially inflated prices. It suffered “significant losses” when Tesco said in September that accounting irregularities caused it to overstate profits, according to the complaint filed yesterday in federal court in Manhattan.
Tesco shares plummeted Sept. 22 after the supermarket chain said some income was booked before being earned and costs were recognized later than incurred. The news prompted investors, including Warren Buffett, to cut their stake. Yesterday, the Cheshunt, England-based company said the accounting caused it to overstate profit by 263 million pounds ($422 million), with more than half of that amount pre-dating this year.
Matt Francis, a spokesman for Tesco, declined to immediately comment on the complaint by the fund, which has 463 members, according to its web site.
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The Irving fund is seeking to represent all Tesco shareholders who purchased the company’s American depositary receipts, each representing one ordinary share, between Feb. 2 and Sept. 22, according to the complaint.
The Irving Firemen’s Relief and Retirement Fund manages $135 million in assets and was 67 percent funded as of February.