HomeBusinessBoeing to pay $200m to settle charges it misled investors over 737 Max crashes
Boeing to pay $200m to settle charges it misled investors over 737 Max crashes
September 23, 2022
Boeing and its former chief executive have settled an investigation by the US’s top financial regulator into allegedly misleading statements the planemaker and its then boss made about its 737 Max jets, involved in two deadly crashes in Indonesia and Ethiopia.
Boeing will pay $200m to settle charges that it misled investors and the former Boeing chief Dennis Muilenburg has agreed to pay $1m.
“In times of crisis and tragedy, it is especially important that public companies and executives provide full, fair, and truthful disclosures to the markets. The Boeing Company and its former CEO, Dennis Muilenburg, failed in this most basic obligation,” the Securities and Exchange Commission (SEC) chair, Gary Gensler, said.
The two fatal 737 Max jets took 346 people’s lives, led to the grounding of the Max fleet and investigations around the world.
The SEC has been investigating statements made by the company and by its former chief executive. Boeing investors lost billions after the crashes and the SEC is tasked with enforcing rules that force companies to disclose information that could affect their share price.
The two crashes, of a Lion Air flight that crashed into the sea off Jakarta and an Ethiopian Airlines flight from Addis Ababa, happened within four months of each other and involved a flight control function called the Maneuvering Characteristics Augmentation System (MCAS).
According to the SEC, after the first crash, Boeing and Muilenburg knew that MCAS “posed an ongoing airplane safety issue, but nevertheless assured the public that the 737 Max airplane was ‘as safe as any airplane that has ever flown the skies.’ Later, following the second crash, Boeing and Muilenburg assured the public that there were no slips or gaps in the certification process with respect to MCAS, despite being aware of contrary information.”
“There are no words to describe the tragic loss of life brought about by these two airplane crashes,” said Gensler.
In 2021 Boeing was fined $2.5bn by the justice department after being charged with fraud and conspiracy in connection with the two crashes. Investigators alleged that a former Boeing pilot misled air-safety regulators about how the Max’s flight-control system worked.
US authorities said the company had engaged “in an effort to cover up their deception” and chose “the path of profit over candor by concealing material information” from the Federal Aviation Administration (FAA), the US’s top airline regulator.
Boeing said it has made “broad and deep changes across our company in response to those accidents” to improve safety and quality, the Associated Press reported.
“Today’s settlement 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,” said the Arlington, Virginia-based company.