A Class Action has been filed against Apple, its CEO and CFO, for making Misleading Statements regarding Apple’s business
On Wednesday Patently Apple posted a legal report titled "The City of Roseville Employees’ Retirement System files a Securities Fraud Class Action Lawsuit against Apple," that included Tim Cook and Luca Maestri as defendants. Today Bronstein, Gewirtz & Grossman, LLC announced that they have filed a similar class action lawsuit against Apple, CEO Tim Cook and CFO Luca Maestri, on behalf of shareholders who purchased or otherwise acquired Apple securities between November 2, 2018 and January 2, 2019, both dates inclusive. This class action seeks to recover damages against Defendants for alleged violations of the federal securities laws under the Securities Exchange Act of 1934.
The complaint alleges that during the Class Period, defendants made materially false and misleading statements and/or failed to disclose adverse information regarding Apple’s business and prospects. Specifically, defendants failed to disclose that: (a) the U.S.-China trade war had negatively impacted demand for iPhones and Apple’s pricing power in greater China; (b) due to Apple discounting the cost of replacement batteries to make up for the Company’s prior conduct of intentionally degrading the performance of the batteries in older iPhones, the rate at which Apple customers were replacing their batteries in older iPhones, rather than purchasing new iPhones, was negatively impacting Apple’s iPhone sales growth; (c) as a result of slowing demand, Apple had slashed production orders from suppliers for the new 2018 iPhone models and cut prices to reduce inventory; and (d) defendants’ decision to withhold unit sales for iPhones and other hardware, which was a metric relevant to investors and their view of the Company’s financial performance, was designed to and would mask declines in unit sales of the Company’s flagship product. As a result of this information being withheld from the market during the Class Period, the price of Apple stock was artificially inflated to more than $209 per share.
Then on January 2, 2019, post-close, Apple disclosed that, for the first time in over 14 years, Apple would miss its prior quarterly revenue forecast amid falling iPhone sales in China, its third largest market after USA and Europe. The Company announced first quarter fiscal 2019 revenues of only $84 billion, below the expected range of $89 billion to $93 billion the Company had announced eight weeks previously on November 1, 2018. The Company also disclosed that in addition to macroeconomics in the Chinese market, the price cuts to battery replacements a year earlier to fix the Company’s prior surreptitious conduct had hurt iPhone sales. This news caused the market price of Apple common stock to decline more than $15 per share, or more than 9%, from a close of $157.92 per share on January 2, 2019 to a close of $142.19 per share on January 3, 2019.
Investors are encouraged to join this case by visiting the firm’s site here. A copy of the full complaint is provided below.
About Making Comments on our Site: Patently Apple reserves the right to post, dismiss or edit any comments. Those using abusive language or negative behavior will result in being blacklisted on Disqus.