Apple, $AAPL, has agreed to pay $490 million to settle a class-action lawsuit that alleged Chief Executive Tim Cook defrauded shareholders by concealing falling demand for iPhones in China

Apple, $AAPL, has agreed to pay $490 million to settle a class-action lawsuit that alleged Chief Executive Tim Cook defrauded shareholders by concealing falling demand for iPhones in China, per Reuters.


A preliminary settlement was filed on Friday (Mar 15) with the US District Court in Oakland, California, and requires approval by US District Judge Yvonne Gonzalez Rogers.

The settlement stemmed from Apple's unexpected announcement on January 2, 2019, that the iPhone maker would reduce its quarterly revenue forecast by up to US$9 billion, citing US-China trade tensions.

On November 1, 2018, Cook had informed investors during an analyst call that while Apple faced sales pressure in markets such as Brazil, India, Russia, and Turkey, where currencies had weakened, he did not include China in that category.

A few days later, Apple instructed suppliers to reduce production. The revised revenue forecast was Apple's first since the iPhone's launch in 2007. The company's shares fell 10 percent the next day, erasing US$74 billion of market value.

Apple and its lawyers did not immediately respond to requests for comment on the ruling. The Cupertino, California-based company denied liability but settled to avoid the cost and distraction of litigation, according to court papers.

Shawn Williams, a partner at Robbins Geller Rudman & Dowd representing the shareholders, called the settlement an "outstanding result" for the class.

The settlement covers investors who purchased Apple shares in the two months between Cook's comments and the revenue forecast.

Apple reported US$97 billion of net income in its latest fiscal year, and its payout equals a little under two days of profit.

Last June, Judge Rogers refused to dismiss the lawsuit. She found it plausible to believe Cook had been discussing Apple's sales outlook and not currency changes, and she said Apple knew China's economy was slowing and demand could fall.

The lead plaintiff is the Norfolk County Council as Administering Authority of the Norfolk Pension Fund, located in Norwich, England.

Lawyers for the shareholders may seek fees of up to 25 percent of the settlement amount.

Since January 2019, Apple's share price has more than quadrupled, giving the company a market value of more than US$2.6 trillion.