Like plenty of tech giants, Apple is no stranger to legal battles. In the latest development, Apple has agreed to shell out a hefty $490 million (£385 million) to settle a lawsuit that accused Tim Cook of pulling a fast one on investors. The claim? That Cook was a bit too optimistic about iPhone demand in China — and hence defrauded shareholders by misleading them.
This lawsuit was brought to the stage by Norfolk County Council from the UK, representing a pension fund that apparently took a hit thanks to Cook’s alleged omissions. The suit claims Cook assured investors back in November 2018 that iPhone sales demand was facing some pressure, but he “would not put China in that category.” Fast-forward two months, and Apple’s tune changes with a revised revenue forecast based on tensions between China and the US. This led to share prices tumbling pretty quickly (wiping $55 billion off the company’s value, to be precise), resulting in the pension fund losing money.
Demand wasn’t quite what Cook had cooked up.
In that two months, reports surfaced suggesting Apple had told its top smartphone assemblers to put the brakes on additional production lines for the iPhone XR. Translation? Demand wasn’t quite what Cook had cooked up. Apple continues to deny it had violated US stock market rules or misled investors.
Despite Apple’s legal wrangling to fend off the lawsuit, a courtroom showdown has been avoided with this preliminary settlement. But not just yet: A judge still needs to give the nod of approval. It remains to be seen how much of the settlement the pension fund will actually pocket. Meanwhile, Apple reported $97 billion in net income last fiscal year.
More to come?
For a company that prides itself on transparency and trust, this isn’t a good look. It’s one thing to miss sales forecasts; it’s another to be accused of deliberately misleading investors. This settlement, while not an admission of guilt, does raise eyebrows about how Apple communicates with its shareholders and the market at large.
There’s also the risk of further lawsuits against Apple in similar circumstances, particularly if this settlement creates a precedent. It’s unlikely Norfolk County Council was the only pension fund to lose money when Apple’s share value fell.
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Like plenty of tech giants, Apple is no stranger to legal battles. In the latest development, Apple has agreed to shell out a hefty $490 million (£385 million) to settle a lawsuit that accused Tim Cook of pulling a fast one on investors. The claim? That Cook was a bit too optimistic about iPhone demand in China — and hence defrauded shareholders by misleading them.
This lawsuit was brought to the stage by Norfolk County Council from the UK, representing a pension fund that apparently took a hit thanks to Cook’s alleged omissions. The suit claims Cook assured investors back in November 2018 that iPhone sales demand was facing some pressure, but he “would not put China in that category.” Fast-forward two months, and Apple’s tune changes with a revised revenue forecast based on tensions between China and the US. This led to share prices tumbling pretty quickly (wiping $55 billion off the company’s value, to be precise), resulting in the pension fund losing money.
Demand wasn’t quite what Cook had cooked up.
In that two months, reports surfaced suggesting Apple had told its top smartphone assemblers to put the brakes on additional production lines for the iPhone XR. Translation? Demand wasn’t quite what Cook had cooked up. Apple continues to deny it had violated US stock market rules or misled investors.
Despite Apple’s legal wrangling to fend off the lawsuit, a courtroom showdown has been avoided with this preliminary settlement. But not just yet: A judge still needs to give the nod of approval. It remains to be seen how much of the settlement the pension fund will actually pocket. Meanwhile, Apple reported $97 billion in net income last fiscal year.
More to come?
For a company that prides itself on transparency and trust, this isn’t a good look. It’s one thing to miss sales forecasts; it’s another to be accused of deliberately misleading investors. This settlement, while not an admission of guilt, does raise eyebrows about how Apple communicates with its shareholders and the market at large.
There’s also the risk of further lawsuits against Apple in similar circumstances, particularly if this settlement creates a precedent. It’s unlikely Norfolk County Council was the only pension fund to lose money when Apple’s share value fell.