High-street supermarket chain Tesco has agreed to pay a fine of £129m to avoid prosecution for overstating its profits in 2014.
Its subsidiary, Tesco Stores Ltd, has reached a deferred prosecution agreement (DPA) with the Serious Fraud Office (SFO) after a two-year probe.
The SFO said Tesco had co-operated with the investigation and had undergone an "extensive" period of change.
Tesco has also agreed with the Financial Conduct Authority (FCA) to spend £85m on compensating investors.
The money will go to those who bought shares or bonds between 29 August and 19 September that year.
The order is a first for the FCA, although it has not imposed its own penalty, and Tesco has accepted the regulator's finding of "market abuse".
Between February and September 2014, Tesco gave a false account of its performance, leading to a trading statement on 29 August 2014 that gave a rosier view of its profits than was the case.
One month later Tesco released another statement estimating it had overstated profits by about £250m, although this figure was subsequently revised up to £326m.
The revelation sent the retailer's share price plunging and sparked two internal inquiries.
Tesco's current chief executive, Dave Lewis, said: "Over the last two-and-a-half years, we have fully co-operated with this investigation into historic accounting practices, while at the same time fundamentally transforming our business.
"We sincerely regret the issues which occurred in 2014 and we are committed to doing everything we can to continue to restore trust in our business and brand."
Tesco expects to take an exceptional charge of £235m to cover the penalty, compensation scheme and related costs.
The charge will be taken in its results for the 2016-17 financial year, which are due to be published on 12 April.
In early trading on Tuesday, Tesco's shares were little moved.
Laith Khalaf, senior analyst, at Hargreaves Lansdown stockbrokers, said the accounting error uncovered was "exceptionally rare" in the UK stock market.
"This is a big slap on the wrist for Tesco, reflecting the seriousness of the offence and its impact on the share price in 2014," he said.
"Dave Lewis underwent a baptism of fire when he took over as CEO in 2014, just as the accounting scandal struck. He and the supermarket will now be hoping to draw a line under the matter, and concentrate on nurturing Tesco's nascent recovery."
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