LONDON – American aircraft manufacturer Boeing and its former CEO Dennis Muilenburg are set to pay over $200 million as settlement over claims they misled investors with regards to the operational safety of their 737 MAX aircraft.
In a statement made on Thursday, the federal watchdog, the Securities and Exchange Commission (SEC) asserted that Boeing and Mr Muilenberg had made “materially misleading public statements following crashes of Boeing airplanes in 2018 and 2019.”
Two major air crashes involving the model saw the loss of hundreds of lives, firstly with the loss of Indonesia’s Lion Air Flight 610 in October 2018, and then the loss of Ethiopian Airlines Flight 302 in March 2019. AviationSource previously reported on the timeline history of the 737 MAX aircraft.
The two disasters forced the grounding of the 737 MAX model for almost two years. Former CEO Muilenburg departed Boeing in late 2019.
In the latest development on Thursday this week, regulators with the SEC have said that they have reached an agreement for the settlement of claims.
Regulators asserted that Boeing had mislead investors with respect to the safety of the aircraft model and the automated MCAS flight system which was found to be responsible for both fatal accidents.
The SEC concluded that both parties – Boeing and Mr Muilenburg – had deliberately made the misleading statements about the aircraft, and that both parties had known about the safety flaws of the MCAS system.
Boeing put “profits over people” – SEC
Gurbir Grewal, Director of the SEC’s enforcement division characterised the situation as putting profits over people, saying:
“Boeing and Muilenburg put profits over people by misleading investors about the safety of the 737 MAX all in an effort to rehabilitate Boeing’s image following two tragic accidents that resulted in the loss of 346 lives and incalculable grief to so many families,”
“Public companies and their executives must provide accurate and complete information when they make disclosures to investors, no matter the circumstances. When they don’t, we will hold them accountable, as we did here.”
In the Thursday statement, SEC Chairman Gary Gentler observed: “In times of crisis and tragedy, it is especially important that public companies and executives provide full, fair, and truthful disclosures to the markets.”
He asserted that, “The Boeing company and its former CEO, Dennis Muilenburg, failed in this most basic obligation.”
Boeing previously agreed to pay $2.5 billion to settle a criminal investigation by the Justice Department after congressional hearings that uncovered serious lapses in the plane’s manufacturing and approval process.
The SEC stated that its orders against Boeing and Muilenburg find that they “negligently violated the antifraud provisions of federal securities laws.”
Without prejudice, both Boeing and Muilenburg consented to the orders made by the SEC, which include penalties of $200 million and $1 million, respectively.