Boeing Charged With Misleading Investors Over 737 Max Safety, Fined $200Mn
21:15 GMT 22.09.2022 (Updated: 20:53 GMT 19.10.2022)
© Photo : PTIA SpiceJet flight from Dubai to Madurai was delayed after the Boeing B737 Max aircraft's nose wheel
© Photo : PTI
The US Securities and Exchange Commission (SEC) revealed on Thursday it had arrived at an agreement for aircraft manufacturer Boeing to pay $200 million for misleading investors in the wake of two deadly crashes by its 737 Max passenger aircraft.
The SEC said it had charged the Boeing Company and its former CEO, Dennis A. Muilenburg, with making "materially misleading public statements" after Boeing 737 Max airliners crashed in 2018 and 2019.
"There are no words to describe the tragic loss of life brought about by these two airplane crashes," SEC chairman Gary Gensler said in a news release.
"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. They misled investors by providing assurances about the safety of the 737 MAX, despite knowing about serious safety concerns. The SEC remains committed to rooting out misconduct when public companies and their executives fail to fulfill their fundamental obligations to the investing public," Gensler said.
The settlement requires Boeing to pay a $200 million fine - or about 0.06% of the profits it made last year - and for Muilenberg to pay a separate $1 million fine.
In a separate statement on Thursday, the plane maker noted it "does not admit or deny" any of the SEC"s fact by agreeing to the settlement.
"We will never forget those lost on Lion Air Flight 610 and Ethiopian Airlines Flight 302, and we have made broad and deep changes across our company in response to those accidents - fundamental changes that have strengthened our safety processes and oversight of safety issues, and have enhanced our culture of safety, quality, and transparency," the company said.
"The settlement announced today fully resolves the SEC's previously disclosed inquiry into matters relating to the 737 MAX accidents. The settlement specifics that Boeing does not admit or deny the findings in the SEC's statement of facts, which concern company statements made in late 2018 and early 2019. 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 stakeholders, employees, and other stakeholders."
The crashes of both aircraft occurred shortly after takeoff and were caused by the 737 MAX's Maneuvering Characteristics Augmentation System (MCAS), which serves as a flight control system designed to enhance the jet's pitch stability so that it feels and flies like other 737s. However, pilots were not told about the modifications by Boeing and thus didn't know how to respond when the computer system pushed the plane's nose down toward the ground. In the two crashes, 346 people died.
After the crashes, all Boeing 737 Max airliners were grounded and the company was forced to fix the problems and completely recertify the aircraft with the US Federal Aviation Administration (FAA). It has paid a large amount of fines, including $2.5 billion to the US Department of Justice for fraud conspiracy, which included monetary damages to customers and a crash-victim beneficiaries fund. It also paid $225 million to shareholders in another lawsuit.
Further investigations revealed that the FAA and Boeing had colluded on recertification of the aircraft, tried to cover up important information, and that the FAA had retaliated against whistleblowers.