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Tesco shares fall as FCA opens ‘full investigation’ into profit debacle

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Tesco has said the Financial Conduct Authority (FCA) has started an investigation into its accounting error, after the supermarket revealed last month it had overstated its half year profits by £250m.

In a statement this morning, Tesco confirmed the FCA had launched a full investigation into the incident.

It said: “The Financial Conduct Authority (FCA) has notified Tesco that it has commenced a full investigation following the overstatement of expected profit for the half year which was described in our announcement of 22 September 2014 and which is currently the subject of an independent review by Deloitte.”

Tesco announced on 22 September it had overstated its half year profits by £250m, sending shares tumbling 11 per cent in a single day.

Today’s announcement sent shares down a further 1.7 per cent to 183p, leaving the stock nearly 50% lower year to date.

The FCA’s move today was widely expected following the profit debacle.

Last week, the Financial Reporting Council (FRC) said it was “monitoring the situation closely”, but would wait until the supermarket’s own investigation is complete.

Tesco launched an internal investigation to be conducted by Deloitte, together with Freshfields, the group’s external legal advisers.

The group has already suspended four executives in connection with the accounting scandal, including UK managing director Chris Bush.

Last week the embattled retailer also admitted its former CFO Laurie McIlwee has not been working the final six months of his contract, encompassing most of the period currently under investigation.

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