A US District Court judge rejects Apple's request to dismiss a lawsuit accusing CEO Tim Cook of defrauding shareholders

A federal court in the United States has denied Apple's request to dismiss a class-action complaint accusing Chief Executive Tim Cook of defrauding shareholders by hiding dwindling demand for iPhones in China.

The judgement by US District Judge Yvonne Gonzalez Rogers late Monday night clears the way for shareholders led by a British pension fund to sue Apple for a one-day drop that wiped out $74 billion (approximately Rs. 6,06,700 crore) in market value.

The case arose from Cook's statement on a November 1, 2018, analyst call that, while Apple was facing sales pressure in areas such as Brazil, India, Russia, and Turkey due to currency weakness, "I would not put China in that category."

A few days later, Apple instructed suppliers to reduce output, and on January 2, 2019, the company unexpectedly reduced its quarterly sales prediction by up to $9 billion (approximately Rs. 73,800 crore), blaming trade concerns between the United States and China.

Apple's sales prediction was cut for the first time since the iPhone debuted in 2007, and the Cupertino, California-based company's stock dropped 10% the next day.

According to Judge Rogers, who is headquartered in Oakland, California, jurors may fairly infer that Cook was addressing Apple's sales projections in China rather than historical performance or the impact of currency fluctuations.

The court also stated that previous to Cook's remark, Apple was aware of China's deteriorating economy and had evidence indicating that demand may plummet.

"A reasonable jury could find that the failure to disclose these risks caused the plaintiff's harm," Rogers ruled.

Apple and its attorneys did not reply to demands for comment on Tuesday.

According to Shawn Williams, a shareholder's lawyer, "we are pleased with the ruling and look forward to presenting the facts to a jury."

The Norfolk County Council, as Administering Authority of the Norfolk Pension Fund, is the primary plaintiff and is based in Norwich, England.

Since January 2019, Apple's share price has nearly quintupled, giving the corporation a market worth of about $3 trillion (roughly Rs. 2,45,97,900 crore).

The case is In re Apple Inc Securities Litigation, No. 19-02033, in the United States District Court for the Northern District of California.