Tesco faces legal action from investors that allegedly lost £150 million from the accounting scandal
"Shareholders were misled by information inaccurately provided to the market with knowledge by management," Jeremy Marshall of Bentham Europe, the firm behind the action told the BBC.
He added that any case against Tesco is expected to be filed by the end of October.
Marshall noted that around 60 unspecified "large" investors are currently expected to take part in a group action against the company, but that number could increase once the suit is formally filed. Pension funds from across the UK, Europe, and USA, along with other asset managers are among those involved right now.
Tesco got into trouble after it initially admitted that it had overstated its profits by £263 million in 2014. That overstatement was later revised upwards to £326 million.
It was found by auditors that profits had been overstated by Tesco after it recorded payments from suppliers before the company was due the money.
As a result of the scandal, Tesco's share price dropped by around 20% costing many investors huge amounts of money. It is these losses, that investors are now looking to recoup through legal action.
Investors have also previously alleged that the company's shares were artificially boosted by the false accounting, as people were made to believe that the company was doing better than it actually was.
Tesco has already been forced to pay out significant sums of money to investors over the scandal. Last November, it agreed to pay $12 million (£8 million) to settle action by American shareholders which claimed that Tesco's accounting irregularities inflated the supermarket's share price.
The news comes roughly one month after it was announced that three former executives from Tesco had been charged with fraud and false accounting related to the overstated profits. Carl Rogberg, Christopher Bush, and John Scouler were all charged with one count of fraud by abuse of position, and one count of false accounting during an investigation into Tesco's accounting practices.
Tesco did not immediately respond to a request for comment from Business Insider.
The company's share price was broadly unmoved on the news, falling just 0.3% as of 8:50 a.m. BST (3:50 a.m. ET).