Apple will face a class-action lawsuit from a group of shareholders led by a UK pension fund, Reuters reporters. The investors have alleged that CEO Tim Cook concealed falling iPhone demand in China and that, as a result, they lost billions of dollars.
Tim Cook Comments Provoke Shareholder Legal Action
Mr. Cook’s comments noted sales pressure in emerging markets on an analyst call on Nov. 1, 2018 could proceed. “I would not put China in that category,” said U.S. District Judge Yvonne Gonzalez Rogers. A few days after Mr. Cook’s comments, Apple told suppliers to cut production. By January 2, 2019, it had slashed its quarterly revenue forecast by up to $9 billion, a move Mr. Cook attributed to US-China trade tensions. Both CEO and company insist there was no proof they defrauded or intended to defraud those making the claims against them.
In her decision, Judge Rogers said Mr. Cook may not have known specifically about the “troubling signs” in China but that it “strains credibility” that he would not have known about either the trade tensions or their potential impact on his company. The plaintiffs offer a “cogent and compelling inference that Cook did not act innocently or with mere negligence,” she wrote. There was also a “strong inference” he knew about the risks when discussing China on the call.