Reuters reports that federal judge says Apple must face part of a lawsuit claiming it fraudulently concealed falling demand for iPhones, especially in China, leading to tens of billions of dollars in shareholder losses.
U.S. District Judge Yvonne Gonzalez Rogers ruled late Tuesday that shareholders can sue over CEO Tim Cook’s comments touting strong iPhone demand on a Nov. 1, 2018 call with analysts, only a few days before Apple told its largest manufacturers to curb production
“Absent some natural disaster or other intervening reason, it is simply implausible that Cook would not have known that iPhone demand in China was falling mere days before cutting production lines,” Rogers wrote.
The Oakland, California-based judge also said a decision by Apple to stop reporting iPhone unit sales “plausibly suggests that defendants expected unit sales to decline.
The complaint, filed with the U.S. District Court for the Northern District of California, is 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.
Another class action lawsuit regarding the matter was filed in April 2019. The City of Roseville Employees’ Retirement System, filing on behalf of all Apple stockholders, also seeks “redress for violation of federal securities laws.”
The lawsuits claim 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.