Apple Agrees to $490 Million Settlement Following Accusations Against CEO Cook Regarding iPhone Sales in China. A tentative settlement was submitted last Friday to the U.S. District Court in Oakland, California, pending approval from U.S. District Judge Yvonne Gonzalez Rogers. Apple has consented to a $490 million payment to resolve a class-action lawsuit accusing CEO Tim Cook of misleading shareholders by hiding a decline in iPhone demand in China.
The initial settlement was submitted last Friday to the U.S. District Court in Oakland, California, and is awaiting approval from U.S. District Judge Yvonne Gonzalez Rogers.
The lawsuit originated from Apple’s unforeseen announcement on Jan. 2, 2019, that it would reduce its quarterly revenue forecast by as much as $9 billion, attributing the cut to U.S.-China trade disputes. During an analyst call on Nov. 1, 2018, Cook informed investors that despite facing sales challenges in markets like Brazil, India, Russia, and Turkey, where currencies had depreciated, he wouldn’t classify China in the same group. Shortly after, Apple instructed its suppliers to reduce production.
The revised revenue forecast was Apple’s first since the iPhone’s debut in 2007. The following day, Apple’s shares dropped by 10%, erasing $74 billion in market value.
Apple and its legal team did not immediately respond to requests for comment on the judgment.
The company, based in Cupertino, California, denied any wrongdoing but agreed to the settlement to evade the expenses and disruptions associated with a lawsuit, according to court documents. Shawn Williams, a partner at Robbins Geller Rudman & Dowd representing the shareholders, described the settlement as an “exceptional outcome” for the class.
The settlement includes investors who purchased Apple shares in the two months between Cook’s statements and the revenue forecast. Apple reported a net income of $97 billion in its most recent fiscal year, and the settlement amount corresponds to just under two days of profit.
Last June, Rogers declined to dismiss the lawsuit. She found it reasonable to assume that Cook was discussing Apple’s sales forecast rather than currency fluctuations
Last June, Rogers declined to dismiss the lawsuit. She found it reasonable to assume that Cook was discussing Apple’s sales forecast rather than currency fluctuations and stated that Apple was aware of China’s economic slowdown and potential demand decrease.
The lead plaintiff is the Norfolk County Council, acting as the Administering Authority of the Norfolk Pension Fund, based in Norwich, England. The shareholders’ attorneys may request fees of up to 25% of the settlement amount. Since January 2019, Apple’s share price has more than quadrupled, giving the company a market value exceeding $2.6 trillion.
The case is registered as In re Apple Inc Securities Litigation, U.S. District Court, Northern District of California, No. 19-02033.
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