Apple will face a lawsuit by shareholders who accused Apple's Chief Executive Tim Cook of hiding the iPhones diminishing demand in China, which resulted in investor losses.

U.S. District Judge Yvonne Gonzalez Rogers said shareholders have the right to sue Cook over his comments, which came during a 2018 call, where Cook and analysts were discussing sales pressure in certain markets and Cook said, “I would not put China in that category,” Reuters reported.

In a 23-page decision, Rogers said shareholders argued that Cook’s statements on the analyst call about China were false and misleading.

Rogers said that while Cook might not have known specifics about “troubling signs” in China that the company had begun seeing initial warning signs. The plaintiffs say Cook knew about the risks when discussing China on the analyst call, and 'that Cook did not act innocently or with mere negligence,” Reuters added.

After the call in question, Apple told suppliers to limit production, and shortly after, the company cut its quarterly revenue forecast by up to $9 billion. Cook blamed the forecast on trade tensions in China and the U.S., Forbes reported.

The lowered forecast was the first by Apple since the iPhone’s launch in 2007. Shares of Apple fell 10% the very next day, which equates to $74 billion of market value lost.

Apple and Cook have said there was no proof they defrauded or intended to defraud investors.

Apple has seen its value hover near $2 trillion as it has upgraded its iPhones and ramped up services during the global pandemic.
Apple has seen its value hover near $2 trillion as it has upgraded its iPhones and ramped up services during the global pandemic. Apple Inc. / Brooks KRAFT
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