A US judge has rejected Apple's attempt to dismiss a class-action lawsuit accusing CEO Tim Cook of concealing falling iPhone demand in China, clearing the way for shareholders to proceed with the legal action.
The lawsuit, led by a British pension fund, stems from a one-day plunge in Apple's market value worth $74 billion.
The legal action follows Cook's comment during an analyst call in November 2018, where he stated that China was not among the markets where Apple faced sales pressure.
US judge allows lawsuit against Apple over alleged iPhone demand concealment.
CEO Tim Cook faces legal action; Image: The Business Journals
A US judge has rejected Apple's bid to dismiss a class-action lawsuit that accuses CEO Tim Cook of defrauding shareholders by concealing falling demand for iPhones in China. The decision by Judge Yvonne Gonzalez Rogers late on Monday night allows shareholders, led by a British pension fund, to proceed with their lawsuit, seeking compensation for a one-day plunge that wiped out $74 billion of Apple's market value.
The lawsuit originates from Cook's comment during an analyst call on November 1, 2018, where he stated that China was not among the markets where Apple faced sales pressure, despite the company instructing suppliers to curb production a few days later. On January 2, 2019, Apple unexpectedly slashed its quarterly revenue forecast by up to $9 billion, attributing it to US-China trade tensions.
Judge Rogers, based in Oakland, California, stated that jurors could reasonably infer that Cook was discussing Apple's sales outlook in China, rather than past performance or currency changes. The judge also noted that Apple had prior knowledge of China's slowing economy and data suggesting a potential decline in demand.
The lead plaintiff in the case is the Norfolk County Council as Administering Authority of the Norfolk Pension Fund, located in Norwich, England.
Since January 2019, Apple's share price has quintupled, resulting in a market value close to $3 trillion.
