Tesco admits FCA’s market abuse allegations

Tesco faces £85 million charge after misleading investors on profits.

Tesco has admitted to market abuse misconduct put forward by the Financial Conduct Authority (FCA) and will pay compensation to investors who purchased its shares.

The FCA found Tesco misled investors on the value of publicly traded shares and bonds between August and September in 2014.

In August, Tesco published a trading update which stated it expected trading profits for the prior six months to reach £1.1 billion, however, it admitted the following month the expected profit was an overstatement.

Tesco said at the time 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.”

The FCA said the firm knew or could reasonably expect to know this.

Andrew Bailey, chief executive of the FCA, explained giving false or misleading information 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,” he added.

The FCA estimated the total amount of compensation that may be payable under the scheme to be approximately £85 million, plus interest.