The lawsuit alleged that Apple's CEO, Tim Cook, defrauded shareholders by concealing falling demand for iPhones in China. The preliminary settlement was filed on Friday with the US District Court in Oakland, California, and is subject to approval by US District Judge Yvonne Gonzalez Rogers.

The lawsuit stems from Apple's unexpected announcement on January 2, 2019, when the company revealed its decision to slash its quarterly revenue forecast by up to $9 billion, attributing it to the ongoing US-China trade tensions. However, a few months earlier, on November 1, 2018, during an analyst call, Cook assured investors that China was not facing the same sales pressure as other markets like Brazil, India, Russia, and Turkey, where currencies had weakened. It was later discovered that Apple had instructed its suppliers to reduce production shortly after Cook's statement.

This revenue forecast adjustment was the first of its kind for Apple since the launch of the iPhone in 2007, resulting in a 10% drop in the company's shares the following day. This decline erased a staggering $74 billion from Apple's market value. While Apple and its lawyers have not yet commented on the ruling, Shawn Williams, a partner at Robbins Geller Rudman & Dowd law firm representing the shareholders, hailed the settlement as an "outstanding result" for the class involved.

The settlement covers investors who purchased Apple shares in the two months between Cook's comments and the subsequent revenue forecast adjustment. Although the payout amounts to $490 million, it represents just a little under two days of Apple's net income, which was reported at $97 billion in its latest fiscal year.

US District Judge Yvonne Gonzalez Rogers found it plausible that Cook had been discussing Apple's sales outlook rather than currency changes during the investor call. The judge also concluded that Apple was aware of the slowing Chinese economy and the potential decrease in demand. The lead plaintiff in the case is the Norfolk County Council as Administering Authority of the Norfolk Pension Fund in Norwich, England.

Lawyers representing the shareholders may seek fees of up to 25% of the settlement amount. Despite the settlement, Apple's share price has soared, more than quadrupling since January 2019, and the company now boasts a market value exceeding $2.6 trillion.

The case, officially titled In re Apple Inc Securities Litigation, is taking place in the US District Court for the Northern District of California, under the case number 19-02033.