Apple to pay Norfolk and others £385m after five-year legal battle
The lawsuit revolved around remarks made by Tim Cook during an investor briefing in November 2018.
Tech giant Apple has conceded defeat to Norfolk County Council in a legal battle, agreeing to a staggering settlement of $490 million (£385 million) in response to allegations of shareholder deception.
The lawsuit, spearheaded by Norfolk Council, accused Apple CEO Tim Cook of misleading investors by concealing dwindling iPhone demand in China, resulting in financial losses for shareholders.
The Norfolk Pension Fund, overseen by the council, was among those impacted by what were deemed fraudulent actions by Mr. Cook.
In a statement released following the settlement, the Norfolk Pension Fund expressed satisfaction with the outcome, stating it is committed to safeguarding the investments of thousands of individuals who rely on their pensions.
The lawsuit revolved around remarks made by Tim Cook during an investor briefing in November 2018.
Cook was accused of making materially false and misleading statements regarding the demand for iPhones and the company's business outlook in China, in violation of the Securities Exchange Act of 1934.
Just two months after the briefing, Apple revised its revenue forecast downward, attributing the decline to escalating trade tensions between China and the US.
The unexpected announcement precipitated a rapid 10% plunge in Apple's stock price and a reduction in shareholder wealth exceeding $70 billion.
During this crucial period, reports surfaced indicating that Apple had instructed its primary smartphone assemblers to halt plans for additional production lines for the iPhone XR, further fuelling suspicions of suppressed demand.
Investors who had purchased Apple shares between November 2018 and January 2019 alleged that they had suffered financial losses due to Cook's misleading statements.
Initially filed by the US city of Roseville, the lawsuit gained momentum when Norfolk County Council assumed the role of lead plaintiff in 2020.
Despite Apple's denial of any wrongdoing, arguing that they had not violated securities laws or misled investors, the prospect of a trial loomed large until both parties agreed to a mediated settlement proposal on 1st March.
The resolution was reached amidst recognition that further litigation would be protracted, burdensome, and costly for all involved.
"Defendants have expressly denied and continue to deny that they have violated the federal securities laws or any other laws, or have otherwise misled investors as alleged in this Action, but in recognition that further litigation will be protracted, overly burdensome, expensive, and distracting, have determined that it is desirable and beneficial for them to resolve the action," the filings said.
The settlement, which was submitted to the US District Court in Oakland, California, awaits final approval from a judge pending further proceedings.
Funds are set to be shared by investors who sought compensation for Apple's alleged deception.
The exact share of the settlement to be allocated to Norfolk County Council remains undisclosed.
For Apple, the $490 million payout represents slightly less than two days' worth of the company's net income. The tech giant reported $97 billion in net income in the last fiscal year.