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Tesco agrees $12m settlement with us shareholders over accounting scandal

| International retailers

Tesco has agreed to pay $12m to settle one of two class action lawsuits brought by disgruntled US investors who claimed that the accounting irregularities, which came to light last year, had inflated the retailer’s share price.

The class action, which was made in New York, was against the company and a number of former directors for alleged breaches of certain U.S. federal securities laws in connection with the overstatement of commercial income. Tesco admitted in September 2014 that it had overstated interim profits by £263m because it incorrectly booked payments from suppliers. Following the news, the price of Tesco’s American depositary shares fell heavily. 

In a statement issued this morning, Tesco said that the settlement agreement, which is subject to confirmation by a federal court in New York, provides it to pay $12m to settle the class action with no admission of liability. It added that the agreement, if confirmed, will settle one of two claims before US courts arising out of the commercial income overstatement. The other claim is brought in Ohio by the remaining holders of ADRs equivalent to less than 0.2% of the total issued ordinary shares of the company. 

Clive Black, analyst at Shore Capital, commented that the settlement of the first US claim was "small beer in the big scheme of things", but added: "Whilst the devil is in the detail, we deem this development to be another notch of good news, allowing senior management to focus that little bit more on the more important day job of turning this once great business around."

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