Apple Settles $490 Million Lawsuit Over Alleged iPhone Demand Concealment

(CTN News) – Apple (AAPL.O) agreed to pay $490 million to resolve a class-action lawsuit accusing CEO Tim Cook of defrauding shareholders by hiding declining iPhone demand in China.

A preliminary settlement was filed in the United States District Court in Oakland, California, on Friday. It must be approved by U.S. District Judge Yvonne Gonzalez Rogers.

It arose from Apple’s surprising statement on January 2, 2019, that the iPhone maker will reduce its quarterly revenue prediction by up to $9 billion, citing U.S.-China trade tensions.

On an analyst call on November 1, 2018, Cook told investors that while Apple faced sales pressure in places such as Brazil, India, Russia, and Turkey, where currencies have dropped, “I would not put China in that category.”

Impact on Apple and Shareholders

A few days later, Apple directed suppliers to reduce production.

The revenue prediction cut was Apple’s first since the iPhone’s release in 2007. Apple shares plunged 10% the next day, wiping away $74 billion in market value.

Apple and its lawyers did not immediately reply to inquiries about the verdict.

According to court documents, the Cupertino, California-based corporation denied culpability but resolved to avoid the expense and distraction of litigation.

Shawn Williams, a lawyer at Robbins Geller Rudman & Dowd representing the shareholders, described the settlement as an “outstanding result” for the class.

The settlement applies to investors who purchased Apple stock in the two months between Cook’s statements and the revenue prediction.

Apple’s net profits in the most recent fiscal year were $97 billion, and its payout equalled little less than two days of profit.

In June, Rogers refused to dismiss the claim.

She believed Cook was discussing Apple’s sales projections rather than currency swings and that Apple knew China’s economy was deteriorating and demand could fall.

The Norfolk County Council, as Administering Authority of the Norfolk Pension Fund, is the primary plaintiff based in Norwich, England.

Lawyers representing shareholders may demand costs of up to 25% of the settlement sum.

Since January 2019, Apple’s share price has more than doubled, valuing the corporation at more than $2.6 trillion.

The case is In re: Apple Inc Securities Litigation, U.S. District Court, Northern District of California, No. 19-02033.