$490 Million Settlement Reached Following Allegations of Shareholder Deception
Apple (AAPL) has agreed to a $490 million settlement to resolve a class-action lawsuit that accused Chief Executive Tim Cook of misleading shareholders by concealing declining iPhone demand in China. Filed on Friday in the U.S. District Court in Oakland, California, the preliminary settlement awaits approval from U.S. District Judge Yvonne Gonzalez Rogers.
The lawsuit stemmed from Apple’s surprise announcement on January 2, 2019, revealing a significant cut in quarterly revenue forecast due to escalating U.S.-China trade tensions. This disclosure came after Cook’s reassurance to investors in November 2018 that China was not facing similar sales pressures experienced in other regions.
Following the announcement, Apple instructed suppliers to reduce production, marking the company’s first revenue forecast reduction since the iPhone’s debut in 2007. Consequently, Apple’s shares plummeted by 10%, erasing $74 billion in market value the following day.
While Apple denied liability, it opted to settle the lawsuit to avoid prolonged litigation costs and distractions. Lead plaintiff Norfolk County Council, representing shareholders who purchased Apple shares during the relevant period, praised the settlement as a significant victory for the class.
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