Apple to face new Shareholder Lawsuit led by U.K. Pension Fund over Tim Cook's China Sales Comments back in 2018
Apple Inc. has been ordered to face a proposed class-action lawsuit by shareholders who accused chief executive Tim Cook of concealing falling demand for iPhones in China, resulting in billions of dollars of investor losses.
In a decision on Wednesday, U.S. District Judge Yvonne Gonzalez Rogers said shareholders led by a U.K. pension fund can sue over Cook’s comment on a Nov. 1, 2018, analyst call that while Apple was facing sales pressure in some emerging markets, "I would not put China in that category."
Apple told suppliers to curb production a few days after Cook spoke, and on Jan. 2, 2019, unexpectedly cut its quarterly revenue forecast by up to $9 billion, which Cook blamed in part on pressure on China’s economy from U.S.-China trade tensions.
The lowered revenue forecast was the first by Cupertino, California-based Apple since the iPhone’s launch in 2007. Shares of Apple fell 10% the next day, erasing $74 billion of market value.
In a 23-page decision, Rogers said shareholders plausibly alleged that Cook’s statements on the analyst call about China were materially false and misleading.
The plaintiffs raised a "strong inference" that Cook knew about the risks when discussing China on the analyst call, and a "cogent and compelling inference that Cook did not act innocently or with mere negligence," Rogers wrote. For more, read the Fox Business news report or the Reuters report.