Apple has been ordered to face a lawsuit from shareholders over CEO Tim Cook’s reported concealment of falling iPhone demand in China, Reuters reports, which caused investors to lose billions.
U.S. District Judge Yvonne Gonzalez Rogers said in a decision on Thursday (Nov. 5) that the shareholders, led by a U.K. pension fund, can sue over Cook’s 2018 comment that while the iPhone was facing sales pressure in some markets, China was not among them.
Reuters writes that Apple told suppliers to curb production after those remarks, and the company cut its revenue forecast for the quarter in January 2019 by $9 billion. Cook blamed that issue in part on the pressure on the Chinese economy from the trade tensions between the country and the U.S.
The lowered forecast was the first one Apple reported since its 2007 launch in Cupertino, California, and shares fell 10 percent the next day, wiping out $74 billion in market value.
Rogers, in a 23-page decision, said Cook’s statements were “materially false and misleading,” and that while Cook may not have specifically known about “troubling signs” seen in China, the idea that Cook would’ve been in the dark on trade tensions and the impact on revenue strained credbility.
In response, Cook and Apple said there was “no proof” the company intended to defraud investors, though Reuters reports they didn’t respond to requests for comments on Thursday.
Apple could face other issues in the region, such as weak iPhone sales that analysts say stem from the late rollout of the iPhone 12, which was delayed by the pandemic. The delay caused Apple’s market capitalization to fall from $2.295 trillion on Sept. 1 to $1.862 trillion by Oct. 30, a decline of 19 percent, PYMNTS reported.
In the tech giant’s annual report, it went over some of the myriad legal cases against it for things like patent infringement and monopolies, alongside new global regulation and scrutiny. These things, Apple said, might end up impacting the company’s bottom line.