Bentham Europe, which is funding litigation, has indicated a group of asset managers, hedge funds and pension funds, including UK and international investors, will file the lawsuit in the UK within the next four weeks.

The class action is being led by law firm Stewarts Law, which said the litigation will seek to prove that misleading statements were made to the market (including by way of omission of material information) and that such statements were relied upon by investors when investment decisions were made.

‘Tesco can only be held liable in respect of untrue or misleading statements if a person discharging managerial responsibilities within Tesco knew the statements to be untrue or misleading or was reckless as to whether they were untrue or misleading, ‘ the law firm said in a statement.

Sean Upson, partner in the commercial litigation and investor protection litigation departments at Stewarts Law, said: ‘Investors have recourse to Tesco under the Financial Services and Markets Act following the misreporting of its commercial income in 2014. There is mounting public evidence that Tesco's management were aware that the financial statements were untrue or misleading and claims against Tesco have a solid basis.’

Claims

The UK claim is reported to be for £150m, considerably higher than the settlement Tesco reached in November last year in the US relating to American depositary receipts. The supermarket giant paid $12m (£9m) to settle a US shareholder lawsuit claiming that the accounting irregularities had inflated its share price, but did not admit liability when agreeing the settlement.

Other claims may also be in the pipeline. In March 2015, Tesco Shareholder Claims Ltd (TSC), a not for profit group, announced it planned to seek to bring an action against Tesco on behalf of institutional shareholders over the material overstatement of profits.

TSC is funded and is supported by Scott + Scott LLP, the US litigation firm which has already brought a similar action against Tesco in the US. The group in the UK is represented by McGuireWoods London and is open to any institutional shareholder which held shares in Tesco prior to the announcement on 22 September 2014.

TSC argues that whilst it supports the new Tesco management’s turnaround strategy, a permanent destruction of value has occurred and had the accounting irregularities not taken place the share price, and value of the company, would today be materially higher. TSC expects the claim to be in the region of 50p-70p per share. Tesco Plc has in excess of eight billion shares listed.

Last month, the UK’s Serious Fraud Office (SFO) charged three former Tesco executives over the accounting scandal, and its investigation is ongoing. Former UK finance director Carl Rogberg, UK managing director Christopher Bush and food commercial director John Scouler pleaded not guilty at Westminster Magistrates Court to one count of fraud by abuse of position and one count of false accounting. They will face trial at Southwark Crown Court on 20 October 2016.

Earlier in September, the Financial Reporting Council (FRC) announced it had dropped its investigation into Laurie McIlwee, Tesco’s former chief financial officer.

Tesco has made no comment on possible legal action.