Apple has been ordered to face a proposed class-action lawsuit by shareholders who accused CEO Tim Cook of concealing falling demand for iPhones in China, resulting in billions of dollars of investor losses, Reuters reports. US District Judge Yvonne Gonzalez Rogers said shareholders led by a UK pension fund can sue over Cook’s comment on a 01 November 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 02 January 2019, unexpectedly cut its quarterly revenue forecast by up to USD 9 billion, which Cook blamed in part on pressure on China’s economy from US-China trade tensions. That was the company's first sales warning since the iPhone’s launch in 2007. Shares of Apple fell 10 percent the next day, erasing USD 74 billion of market value.
Apple and Cook have said there was no proof they defrauded or intended to defraud the plaintiffs.
The judge found that shareholders plausibly alleged that Cook’s statements on the analyst call about China were materially false and misleading. While Cook might not have known specifics about “troubling signs” in China that the company had begun seeing, it “strains credulity” he would have been in the dark about the trade tensions and their possible impact on Apple.
The plaintiffs are led by the Norfolk County Council as Administering Authority of the Norfolk Pension Fund, located in Norwich, England. The case is in US District Court for the Northern District of California.
