Boeing to pay $200 million after SEC says it misled investors over 737 MAX crashes


Topline

Boeing agreed on Thursday to pay $200 million to settle Securities and Exchange Commission charges that it misled investors after two fatal 737 MAX crashes killed 346 people and grounded its fleet for 20 months – the latest settlement concluded by Boeing after the 737 disaster.

Highlights

The SEC has accused Boeing and its former CEO Dennis Muilenburg of making “substantially misleading public statements” following two crashes of its 737 MAX in 2018 and 2019.

The SEC alleges that Boeing and Muilenburg knew the first crash was caused in part by a faulty flight control function that posed a “permanent aircraft safety problem,” but still told the public that the plane was “as safe as any plane that has ever flown the skies”, instead blaming the crash on pilot error and poor aircraft maintenance.

After the 2019 crash, the SEC says Boeing defended the 737 MAX certification processes even though Muilenburg was “aware of information questioning certain aspects of the certification process.”

In addition to the $200 million the company must pay, Muilenburg, who was CEO at the time of the crashes before he was fired in December 2019, has also agreed to pay $1 million.

Boeing has neither admitted nor denied any of the SEC’s allegations, the regulator said.

It is the latest financial settlement after the 737 MAX crashes, following Boeing’s 2021 agreement to pay $2.5 billion to resolve federal criminal charges that it misled the Federal Aviation Administration, and a $237.5 million settlement in April by the company’s board of directors.

In a statement to Forbesa company spokesperson said the settlement is part of Boeing’s “broader efforts to responsibly resolve outstanding issues related to the 737 MAX accidents” to better serve its “shareholders, employees and other stakeholders.” “.

Key Context

All of the 737 MAX jets – Boeing’s latest version of its best-selling plane – have been grounded around the world after a fatal crash in March 2019 in Ethiopia, which came about five months after another crash in Indonesia. Both crashes were caused by a faulty sensor in the flight control system that pushed the plane’s nose down. The Federal Aviation Administration cleared the planes to fly again nearly 20 months later, after a series of test flights following changes to its software to prevent downward thrust. A spokesperson said Forbes Boeing has made “broad and deep changes” in response to the crashes, including implementing an enhanced safety process and increased oversight. Last year’s $237.5 million shareholder settlement also led the company to hire a third-party ombudsman and add a member to its board of directors with experience in aviation, engineering and product safety monitoring. However, Boeing lost nearly $12 billion in 2020 after it halted deliveries of its 737 MAX aircraft and the Covid-19 pandemic halted travel.

crucial quote

“In times of crisis and tragedy, it is especially important that public companies and executives provide full, fair and truthful information to the markets – the Boeing Company and its former CEO, Dennis Muilenburg, have failed in this most basic obligation. “said SEC Chairman Gary. Gensler said in a press release.

Further reading

Boeing directors settle shareholder lawsuit over 737 MAX crashes for $237.5 million (Forbes)

Boeing to pay $200 million to settle SEC investigation into 737 MAX crashes (Wall Street Journal)

Boeing to pay $200 million to settle charges of misleading investors after 737 Max crash (CNBC)

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