Boeing charged with misleading investors on 737 MAX safety
Boeing is paying $200m to settle charges it misled investors over 737 Max crashes.
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Boeing charged with misleading investors on 737 MAX safety
Boeing was fined $200 million by US securities officials over the misleading assurances of the world's largest aerospace company about the safety of the 737 MAX airplane following two fatal crashes, regulators announced Thursday.
The company agreed to pay a penalty to settle charges it "negligently" violated the US security laws' antifraud provisions, according to the Securities and Exchange Commission, which said the company and its leader "put profits over people."
Dennis Muilenburg, Boeing's former chief executive, also accepted to pay $1 million to settle the same charges in a civil case.
This comes following October 2018's Lion Air Crash in Indonesia and March 2019's Ethiopian Airlines crash in Ethiopia that took the lives of nearly 350 passengers.
Muilenburg approved one month after the first crash a Boeing press release that "selectively highlighted certain facts," implying that what contributed to the crash were poor aircraft maintenance and a pilot error.
Following the second crash, both Muilenburg and Boeing confirmed to the public that there was "no surprise or gap" in MAX's federal certification despite being aware of opposite information, the SEC said.
Boeing misled investors about the safety of the 737 MAX
In a press release, SEC chair Gary Gensler said that "In times of crisis and tragedy, it is especially important that public companies and executives provide full, fair, and truthful disclosures to the markets," adding, "The Boeing Company and its former CEO, Dennis Muilenburg, failed in this most basic obligation. They misled investors by providing assurances about the safety of the 737 MAX, despite knowing about serious safety concerns."
By agreeing to pay the penalties, both Muilenburg and Boeing did not admit or deny the agency's findings, the SEC said.
The company's spokesperson commented that Boeing said the agreement "fully resolves" the SEC's inquiry and is part of the company's "broader effort to responsibly resolve outstanding legal matters related to the 737 MAX accidents in a manner that serves the best interests of our shareholders, employees, and other stakeholders."
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A lawyer representing the families of the Ethiopian Airlines flight's victims called for "Muilenburg or anyone else who persuaded the government to keep the MAX 737 Boeing flying" to be "fully investigated for conduct that could be criminal in nature."
After the crashes, and following a 20-month grounding, Boeing's 737 MAX was approved to return to service after being cleared by air safety authorities in November 2020.
The Maneuvering Characteristics Augmentation System (MCAS) was a principal cause of both crashes since it was responsible for preventing the plane from stalling as it ascended; instead, it forced the nose of the plane downward. The Federal Aviation Administration demanded Boeing upgrade this system to address the flaw.
Boeing agreed to pay $2.5 billion in January 2021 to settle a US criminal charge over claims it defrauded regulators overseeing the 737 MAX.
