- Stock Code:
- Date Founded:
- Dave Calhoun
- Headquarters Location:
- Chicago, USA
- Key Product Lines:
- Boeing 737, Boeing 747, Boeing 757, Boeing 767, Boeing 777, Boeing 787
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The 737 MAX may be back and flying almost all over the world again. However, Boeing’s financial woes in the wake of the fatal crashes that caused the type’s lengthy grounding are not over. The American aerospace manufacturer will need to pay $200 million for misleading investigators, the Securities and Exchange Commission (SEC) said on Thursday.
Materially misleading statements
The SEC charged Boeing and its former Chief Executive Officer, Dennis Muilenburg, with “making materially misleading public statements following crashes of Boeing airplanes in 2018 and 2019.” Muilenburg, who was let go by Boeing in December 2019 in the wake of the 737 MAX crisis, will pay $1 million of the settlement.
The ruling is related to statements to investors in the aftermath of the crashes of Lion Air Flight 610 on October 29, 2018 (189 casualties, 0 survivors) and Ethiopian Airlines flight 302 on March 10, 2019 (157 casualties, 0 survivors). SEC Chair Gary Gensler commented,
“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 Chair said there were “no words to describe the tragic loss of life” brought on by the two crashes. Photo: Getty Images
Omitting internal concerns over safety of MCAS
According to the SEC, one month after the Lion Air crash, Boeing issued a statement edited and approved by the then-CEO, which selectively highlighted sentences from the Indonesian investigation, suggesting that pilot error and poor maintenance were the main contributors to the crash.
Furthermore, the press release claimed the plane was safe, omitting an internal review that found that the MCAS posed an ongoing “airplane safety issue” and that Boeing had already begun redesigning it to address the concerns.
Muilenburg also told reporters six weeks following the March 2019 crash that “there was no surprise or gap. . . that somehow slipped through [the] certification process” for the 737 MAX and that Boeing had “gone back and confirmed again. . . that we followed exactly the steps in our design and certification processes that consistently produce safe airplanes.” However, the SEC says he was well aware of information that called into question aspects of the MCAS certification process.
The former CEO of Boeing deliberately withheld information about safety issues with the MCAS, the SEC found. Photo: Getty Images
Neither denying or admitting
The SEC’s orders against both Boeing and Muilenburg found that they “negligently violated the antifraud provisions of federal securities laws” in their efforts to reestablish the company’s reputation after the crashes caused its market value to drop by billions of dollars. Boeing, and Muilenburg, have neither denied nor admitted the Commission’s findings.
The company said in a statement (about the statements),
“The settlement announced today fully resolves the SEC’s previously disclosed inquiry into matters relating to the 737 MAX accidents. The settlement specifies 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.”
The SEC enforces laws requiring publicly traded companies to provide accurate information to investors. Boeing was previously ordered to pay $2.5 billion by the Department of Justice following criminal conspiracy charges to defraud the Federal Aviation Administration (FAA) in connection with the MAX crashes.
Source: Securities and Exchange Commission, Seeking Alpha