Boeing Co. will pay $200 million to settle charges that the company and its former chief executive misled investors about the safety of its 737 Max after two of the planes crashed, killing 346 people.
The Securities and Exchange Commission said Thursday that it charged planemaker and former CEO Dennis Muilenburg with making material misleading public statements about the plane and an automated flight control system that were implicated in the crashes in Indonesia and Ethiopia.
Neither Boeing nor Muilenburg admitted wrongdoing, but offered to settle and pay fines, including $1 million to be paid by Muilenburg, who was ejected in December 2019, nine months after the second crash.
The SEC said Boeing and Muilenburg knew the flight system, known as MCAS, posed a safety concern, but promised the public the plane was safe. The SEC said they also falsely claimed that there were no loopholes in the plane’s certification process in the first place.
“Boeing and Muilenburg put profits before people by misleading investors about the safety of the 737 Max, all in an effort to rehabilitate Boeing’s image” after the accidents, said Gurbir Grewal, director of the company’s compliance division. SEC.
Boeing said it has made “broad and profound changes to our company in response to those accidents” to improve safety and quality.
“Today’s settlement is part of a broader effort by the company 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,” he said. the company headquartered in Arlington, Virginia.
A new Max operated by Indonesia’s Lion Air crashed into the Java Sea in October 2018, and another Max flown by Ethiopian Airlines crashed into the ground near Addis Ababa in March 2019. In each crash, MCAS pushed the nose down after getting faulty readings from a single sensor, and the pilots were unable to regain control.
The accidents prompted regulators around the world to ground the plane for nearly two years until Boeing made fixes to the flight control system, which was designed to help prevent stalls when the nose is pointed too high. . None of the planes that crashed were in danger of stalling.
The SEC accused Boeing of misleading investors in a press release after the Indonesian crash that said the plane was “as safe as any plane that has ever flown in the skies.” Boeing knew when it made that claim that MCAS would need to be fixed and was already designing changes, the SEC said.
After the crash in Ethiopia, Muilenburg said on a call with Wall Street investors and analysts and during Boeing’s annual shareholder meeting that the company had followed the normal process for regulators to certify the plane. But by then, Boeing, responding to a subpoena from federal prosecutors, had already found documents indicating that it had failed to disclose key facts about MCAS to the Federal Aviation Administration, the SEC charged.
Boeing reached a separate $2.5 billion settlement with the Justice Department last year. Most of that money went to airlines whose Max planes were on the ground.