boeing agrees to pay $200 million for misleading the public about the 737 max
US– Boeing and its former CEO Dennis Muilenburg have agreed to pay hefty fines to settle allegations by the Securities and Exchange Commission that they misled the public about the safety of the 737 Max after two fatal crashes in 2018 and 2019.
The Securities and Exchange Commission claims that since the October 2018 Lion Air 737 Max crash that killed 189 people, Boeing and Muilenburg knew part of the flight control system was an ongoing safety issue, but told the public that the 737 Max is safe to fly. fly. In the aftermath of the March 10, 2019, fatal 737 Max crash, the SEC alleges that Boeing and Muilenburg deliberately misled the public about “misses” and “gaps” in the certification process for this flight control system.
“In times of crisis and tragedy, it is especially important that public companies and executives provide full, fair, and truthful disclosures to the markets,” said SEC Chair Gary Gensler in a statement. “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 company and Muilenburg agreed to settle allegations of violating anti-fraud provisions of U.S. securities laws, but did not acknowledge or deny the SEC’s allegations. Boeing agreed to pay $200 million in compensation and Muilenburg agreed to pay $1 million.
“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,” said Gurbir Grewal , director of the SEC’s Enforcement Division in a statement.
The fines, while heavy, pale in comparison to the financial blow Boeing has taken over the years from the 737 Max. Boeing’s reported losses have reached tens of billions of dollars, and that’s not counting the company’s ongoing legal risks. Boeing (BA) shares fell more than 3% on Thursday but rose slightly after the close of trading following the SEC announcement.