Apple agrees to pay $490 million to settle class-action lawsuit

Apple has agreed to pay US$490 million to settle a class-action lawsuit that claims CEO Tim Cook defrauded shareholders by concealing falling demand for iPhones in China, reports Reuters.

A preliminary settlement was filed on Friday with the U.S. District Court in Oakland, California, and requires approval by U.S. District Judge Yvonne Gonzalez Rogers, the article adds. The complaint was filed with the U.S. District Court for the Northern District of California in 2019; it’s a securities fraud class action on behalf of all purchasers of Apple securities between Nov. 2, 2018, and Jan. 2, 2019. It accuses Apple and the execs of violations of the federal securities law

The lawsuits claims that Apple is misleading in its generally rosy predictions for upcoming financial results due to slowing iPhone sales and other issues. It claims that the misrepresentations alleged would tend to induce a reasonable investor to misjudge the value of Apple common stock. The lawsuit was filed after Apple’s unexpected announcement on Jan. 2, 2019, that the iPhone maker would slash its quarterly revenue forecast by up to $9 billion, blaming U.S.-China trade tensions.

However, Cook had told investors on an Nov. 1, 2018, analyst call that although Apple faced sales pressure in markets such as Brazil, India, Russia and Turkey, where currencies had weakened, “I would not put China in that category.” Then the tech giant told suppliers a few days later to curb production.

The lowered revenue forecast was Apple’s first since the iPhone’s launch in 2007. Shares of Apple fell 10% the next day, wiping out $74 billion of market value.