Apple accused in US lawsuit of security fraud over iPhone sales in China

(Reuters) – Apple Inc was charged with a new security fraud lawsuit to hide a decline in iPhone demand, especially in China, which led to a $ 74 billion day-to-day market value when the truth became known. The complaint on Tuesday seeks compensation for investors who bought the Apple stock in the two months before CEO Tim Cook on January 2, unexpectedly, Apple's quarterly sales forecast reduced to $ 9 billion, partly due to the intensifying US US war with China.

FILE PHOTO: One person has a red iPhone product at an Apple store in Nanjing, Jiangsu province, China, March 25, 2017. REUTERS / Stringer

It was the first time since iPhone's 2007 launch as Apple had cut its revenue forecast.

Apple's share price fell 10 percent the next day, causing Cupertino, California-based companies' market capitalization to be about 40 percent lower than their $ 1.1 billion three months earlier.

Cook and CFO Luca Maestri were also named as defendants in the proposed class action. Apple did not respond promptly on Wednesday to comment requests.

The case was filed in the federal court of Oakland, California by the City of Roseville Employees Retirement System, a Michigan pension scheme.

It is represented by Robbins Geller Rudman & Dowd, a security class action specialist.

The complaint said the iPhone demand was declining due to trade tensions between the US and China and customers' growing preference for replacing batteries in older iPhones, causing Apple to order suppliers from new iPhones and reduced prices to reduce inventory .

But none of this was revealed when it should have been, said the complaint, partly because of Apple's November 1, 2018 decision to stop revealing the sale of devices for the iPhone.

Asked at a conference call that day about Apple's performance in emerging markets, Cook quoted imprint on sales in Brazil and India, but said, "I wouldn't put China in that category," the complaint said.

The lawsuit was filed the same day. Apple settled all its lawsuits with Qualcomm Inc. Their disputes centered mainly on Qualcomm mobile chip patents, and how much Apple would pay to use the technology.

The case is the City of Roseville Employees Retirement System against Apple Inc et al. District Court, Northern District of California, No. 19-02033.

Reporting by Jonathan Stempel in New York; Editing by Susan Thomas

Our Standards: Thomson Reuters Trust Principles.

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