A group action lawsuit led by Norfolk County Council has forced Apple to payout £385m in compensation for pension fund loses.
The class action alleged Apple’s boss, Tim Cook, defrauded shareholders by covering up lower demand for iPhones in China.
The local authority argued this led to the council-administered Norfolk Pension Fund losing money.
The county council has been involved in a legal fight with Apple for at least two years after the Norfolk Pension Fund lost a reported $1m (£740,000) due to its investment in Apple shares.
The local authority alleged that Apple ‘misrepresented’ its business in China during a conference call for analysts and investors in 2018.
According to a document from the US court, in response to an analyst who raised concerns about ‘deceleration’ in emerging markets such as India, Turkey, Russia and Brazil, Apple’s CEO Tim Cook said he ‘d[id]n’t see it as some sort of issue that is common’ among all emerging markets, as ‘each one of the emerging markets has a bit of a different story’.
He then allegedly added: ‘I would not put China in that category.’
Norfolk County Council argued that while he was claiming that China’s economy was not at risk of deceleration, Mr Cook already knew that – to quote the court document – ‘the U.S.-China trade tensions and economic conditions in China were negatively impacting sales and demand for Apple products, particularly iPhones’.
Mr Cook then allegedly instructed Apple’s smartphone assemblers to ‘halt plans for additional production lines’ for the recently released iPhone XR.
In January 2019, Cook wrote to investors to inform them that revenue for the first quarter of 2019 was expected to be $84bn – contrary to Apple’s guidance range of $89bn to $93bn announced the previous November – due to ‘deceleration’ in China’s economy.
A statement from Norfolk Pension Fund said:
‘We are mindful that we are stewards of pensions relied upon by thousands of families and individuals.
‘When and where it’s warranted, we will take decisive action to recover losses when our participants’ investments are harmed by fraud.’
