Apple Inc. has reached a significant settlement of $490 million to resolve a class-action lawsuit accusing Chief Executive Tim Cook of misleading shareholders by concealing declining iPhone demand in China.
The preliminary settlement, filed on Friday in the U.S. District Court in Oakland, California, awaits approval from U.S. District Judge Yvonne Gonzalez Rogers.
The lawsuit stemmed from Apple’s unexpected announcement on January 2, 2019, when the tech giant revealed plans to reduce its quarterly revenue forecast by up to $9 billion, citing trade tensions between the United States and China.
Tim Cook’s statements during an analyst call on November 1, 2018, came under scrutiny. Despite acknowledging sales pressure in several markets due to weakened currencies, including Brazil, India, Russia, and Turkey, Cook assured investors, “I would not put China in that category.”
However, just days later, Apple informed suppliers to cut production, signaling deeper issues in the Chinese market.
This announcement marked Apple’s first revenue forecast cut since the launch of the iPhone in 2007, leading to a 10% drop in its shares the following day, wiping out $74 billion of market value.
While Apple denied liability, court documents revealed the company opted to settle to avoid the expenses and distractions of prolonged litigation.
Shawn Williams, representing the shareholders, praised the settlement as a significant victory for the class, which includes shareholders who acquired Apple shares in the two months following Cook’s remarks.
Last June, Judge Gonzalez Rogers rejected Apple’s attempt to dismiss the lawsuit, finding merit in the argument that Cook’s comments had related to the company’s sales outlook rather than currency fluctuations.
The lead plaintiff in the case is the Norfolk County Council as the Administering Authority of the Norfolk Pension Fund, based in Norwich, England.
Lawyers representing the shareholders may seek fees of up to 25% of the settlement amount.
Apple’s share price has surged more than fourfold since January 2019, propelling the company’s market value to over $2.6 trillion.
The case is officially known as In re Apple Inc Securities Litigation and is filed in the U.S. District Court, Northern District of California, with the case number 19-02033.
