28 March 2017
FCA requires redress scheme but decides not to impose penalty in light of co-operation and DPA
The FCA has today issued a Final Notice against Tesco plc and Tesco Stores Limited (together "Tesco") stating that Tesco committed market abuse on 29 August 2014 when Tesco plc issued a trading update containing an overstated profit forecast. The FCA found that the update created a false market in Tesco plc shares until 22 September 2014 when Tesco plc made a further announcement identifying the overstatement.
The FCA has decided not to impose a financial penalty in respect of this market abuse, but has instead imposed a requirement on Tesco to pay compensation to net purchasers of its shares and listed bonds between 29 August 2014 and 22 September 2014.
In parallel it has been announced that the SFO and Tesco Stores Limited have reached an agreement which, if approved by the Crown Court at a public hearing on 10 April 2017, will result in a Deferred Prosecution Agreement in connection with "substantially similar conduct" to that described in the Final Notice (the "DPA"). If approved, the DPA will result in Tesco Stores Limited paying both a financial penalty of £128,992,500 and the SFO’s full costs. The other terms of the proposed DPA are not yet known.
 The DPA concerns only the potential criminal liability of Tesco Stores Limited. It does not address whether liability of any sort attaches to Tesco plc or any employee or agent of Tesco plc or Tesco Stores Limited.