Apple to face legal action over violating the security exchange act

A lawsuit filed in the US has alleged that Apple violated the country’s Securities Exchange Act by hiding a slowdown in demand for iPhones, especially in China, the media reported.

The City of Roseville employees’ retirement fund filed the suit on Tuesday in Northern California US District Court, The Mercury News published from San Jose reported.

The lawsuit claimed that Apple knew in November its iPhone sales were hit, but refrained from revealing it to investors then, leading to economic loss for investors.

The lawsuit seeks class-action status, to bring in everyone who bought Apple common stock between November 2, 2018 and January 2, 2019, the report said, adding that the plaintiff is seeking a jury trial and unspecified damages.

Apple in November said it had gone into the holiday season with its “strongest lineup of products and services ever,” according to the suit.

But in reality, the US trade war with China was hurting the iPhone sales and Apple and its CEO Tim Cook were aware of it in November, claimed the lawsuit which said that Apple disclosed the “true state” of its first quarter iPhone sales only in January.

The suit alleged that Apple and Cook’s “materially false and misleading statements” in November propped up the company’s stock, “which continued to trade at artificially inflated prices”.

But in January, Apple lowered its revenue guidance for fiscal 2019 first quarter, which ended on December 29.

In a letter to investors, Cook said that the company now expects revenue of approximately $84 billion, down from the $89 to $93 billion it had previously projected.

Cook acknowledged that the revenue shortfall in its guidance was partly due to China’s trade tensions with the US. The slowdown in the Chinese economy also impacted its revenue, he said.

Apple’s disclosures in January caused it’s stock price to fall by more than $15 per share, or more than 9 percent, the suit claimed.