Lawsuit filed by Apple shareholders allege that Tim Cook and co fraudulently concealed declining demand for iPhones, especially in China
Disgruntled shareholders at Apple have launched a lawsuit against the firm, making some serious allegations over financial disclosures.
According to Reuters, a federal judge said 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.
This is not the first time that Apple has been sued by shareholders. In 2013 for example, CEO Tim Cook dismissed a lawsuit led by hedge fund manager David Einhorn that aimed to improve returns for shareholders as a “silly sideshow”. Einhorn later withdrew his lawsuit.
But now according to Reuters, US District Judge Yvonne Gonzalez Rogers whilst dismissing most of the claims in the new lawsuit, ruled late Tuesday that shareholders can sue over Tim Cook’s comments touting strong iPhone demand on a 1 November 2018 analyst call, only a few days before Apple told its largest manufacturers to curb production.
It was the first time since the iPhone’s 2007 launch that the Cupertino, California-based company had cut its revenue forecast.
Apple stock fell 10 percent the next day, erasing $74 billion of market value, hence the angry shareholders.
“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 reportedly wrote.
The judge also said a decision by Apple to stop reporting iPhone unit sales “plausibly suggests that defendants expected unit sales to decline,” Reuters reported.
Apple did not immediately respond on Wednesday to requests for comment.
The shareholder lawsuit has been led by the Employees’ Retirement System of the State of Rhode Island.
Earlier this week it was revealed that the smartphone industry had seen its worst-ever sales decline in the first quarter of 2020, with sales to end users dropping by 20.2 percent year-on-year due to the coronavirus lockdown.
Last month a report stated that Apple plans to delay full production of its line of iPhones planned for release later this year by about a month.
Quiz: How well do you know Apple?