Outcome at a glance
Tesco agreed that it committed market abuse. The FCA issued a public censure and required investor restitution, without imposing an additional FCA financial penalty. [1, §§6.3–6.7; 2]
The procedural record
- Trading update published
Tesco announced expected half-year trading profit of about £1.1 billion. [1, §2.1]
- Profit overstatement disclosed
A further update identified an overstatement linked principally to commercial-income recognition and cost accruals. [1, §2.2]
- FCA final notice issued
The FCA required restitution and published its market-abuse findings. [1, §§1.1, 6.3–6.7]
- Compensation scheme launched
KPMG administered the scheme on Tesco’s behalf. [2]
Allegations & issues
The 29 August 2014 trading update gave a misleading impression of the value of Tesco shares and bonds. [1, §2.3]
Key rulings & findings
The FCA found market abuse under section 118(7). It did not attribute knowledge of the misleading statement to Tesco plc’s board. [1, §2.3]
Admissions
Tesco plc and Tesco Stores Limited agreed they committed market abuse; this was not a no-admission resolution. [2]
Disposition
Final Notice issued on 28 March 2017. The compensation scheme opened on 23 August 2017. [1–2]
Penalties, damages & redress
Investor restitution was required. The FCA chose public censure rather than its own financial penalty, taking account of the separate SFO resolution and cooperation. [1, §§6.3–6.7]
Restrictions & obligations
Compensation eligibility and administration are governed by Annex 2 of the notice; this is not an open invitation to submit a claim today. [1]
The misleading update and investor losses
The FCA found that the August statement created a false market in the relevant shares and bonds. Its restitution approach addressed losses suffered by investors who bought at inflated prices, with the calculation taking account of sales or other mitigation. The notice defines the securities and qualifying period rather than covering every Tesco investment. [1, §§2.3–2.5, 3.1, 6.2; Annex 2]
The FCA expressly distinguished corporate knowledge from knowledge of the Tesco plc board. It attributed knowledge below board level to the company for this market-abuse finding, without suggesting that board members knew or should have known the statement was misleading. [1, §2.3]
Compensation and the separate criminal resolution
The FCA estimated compensation at approximately £85 million plus interest when announcing the scheme. That was an estimate of potential redress, not an additional fine or a statement that exactly that amount had already been paid. [2]
Tesco agreed that it committed market abuse. The FCA chose restitution and public censure instead of an additional financial penalty, taking account of cooperation and the separate SFO agreement with Tesco Stores Limited. The regulatory notice and that criminal agreement concern different proceedings; neither should be used as a shorthand for the outcome of an individual’s prosecution. [1, §§2.6, 6.7; 2]
THE UNDERLYING RECORD
Primary sources
Read the full documents for their precise wording and context. Regulator summaries are identified separately from court records.
Regulator / agency publication · fca.org.uk01 · FCA · Final Notice, §2.3, §§6.3–6.7 and Annex 2 ↗Regulator / agency publication · fca.org.uk02 · FCA · Agreed market abuse and compensation scheme ↗