Qualcomm Reaches $75 Million Settlement Over Sales Practices
Qualcomm has agreed to pay $75 million to settle a lawsuit with shareholders. The shareholders claimed that Qualcomm misled them by hiding its unfair sales and licensing practices. The settlement is all in cash and was filed on Tuesday in a federal court in San Diego. It still needs approval from U.S. District Judge Jinsook Ohta, who allowed the lawsuit to proceed as a class action in March 2023.
Background of the Lawsuit
The lawsuit includes Qualcomm and six individuals, such as former chief executives Paul Jacobs and Steven Mollenkopf. Although they agreed to settle, Qualcomm and the individuals denied any wrongdoing. The San Diego-based company has not yet commented on the settlement.
Accusations Against Qualcomm
Shareholders accused Qualcomm of artificially raising its share price from February 2012 to January 2017. They said Qualcomm misled investors by claiming its chip sales and technology licensing were separate. In reality, Qualcomm bundled these services to reduce competition.
Legal Troubles in 2017
In January 2017, both the Federal Trade Commission (FTC) and Apple sued Qualcomm. They accused the company of trying to dominate the market for baseband processors, which are crucial chips in cellphones. Apple also claimed Qualcomm overcharged for these chips and demanded harsh terms for licensing its technology.
Market Impact
Qualcomm denied the claims but saw its share price drop by 13% the day after Apple's lawsuit became known.
Case Information
The case is titled In re Qualcomm Inc Securities Litigation, and is taking place in the U.S. District Court for the Southern District of California, under the case number No. 17-00121.
This settlement marks a significant moment in Qualcomm’s legal battles over its business practices. The outcome will likely be closely watched by investors and industry insiders.
