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Apple has agreed to a settlement of $490 million in a class-action lawsuit alleging Chief Executive Tim Cook misled shareholders by concealing declining iPhone demand in China.
The preliminary settlement, filed on Friday with the U.S. District Court in Oakland, California, is subject to approval by U.S. District Judge Yvonne Gonzalez Rogers.
Background and Allegations:
The lawsuit stems from Apple’s unexpected announcement on Jan. 2, 2019, in which the tech giant revealed plans to reduce its quarterly revenue forecast by up to $9 billion, citing U.S.-China trade tensions.
This announcement followed Cook’s earlier statement to investors on Nov. 1, 2018, in which he downplayed concerns about Chinese market demand.
Settlement Terms and Denial of Liability:
Under the settlement, Apple denies liability but agrees to pay $490 million to resolve the claims. The company cited a desire to avoid the costs and distractions of prolonged litigation.
Shareholders who purchased Apple shares between Cook’s comments and the revenue forecast will be covered by the settlement.
Court’s Findings and Shareholder Reaction:
U.S. District Judge Yvonne Gonzalez Rogers refused to dismiss the lawsuit last June, finding it plausible that Cook had discussed Apple’s sales outlook rather than currency changes.
Representing the shareholders, Shawn Williams hailed the settlement as an “outstanding result” for the class.
Financial Impact and Legal Fees:
Apple’s net income in its latest fiscal year amounted to $97 billion, rendering the $490 million settlement equivalent to less than two days of profit. Lawyers representing the shareholders may seek fees of up to 25% of the settlement amount.
Market Response and Case Details:
Since January 2019, Apple’s share price has more than quadrupled, resulting in a market value exceeding $2.6 trillion. The lead plaintiff in the lawsuit is the Norfolk County Council, representing the Norfolk Pension Fund in Norwich, England.
