Boeing to pay 0 million to settle charges it misled investors in 737 Max crashes

Boeing to pay $200 million to settle charges it misled investors in 737 Max crashes

Boeing is paying $200 million to settle federal investor fraud allegations surrounding its 737 Max plane. two of which crashed in 2018 and 2019, killing a total of 346 people.

The planemaker and its former chief executive, Dennis Muilenburg, allegedly misled the public and investors by claiming the plane was safe despite knowing a flight control system posed a safety risk, the Commission said on Thursday. Stock Market and Securities.

Muilenburg will pay an additional $1 million to settle the same charges, the agency said. Neither Boeing nor Muilenburg admitted wrongdoing as part of the settlement.

“Boeing and Muilenburg are putting profits over people by misleading investors about the safety of the 737 Max, all in an effort to rehabilitate Boeing’s image after two tragic accidents,” said Gurbir Grewal, director of Boeing’s compliance division. the SEC, in a statement. “But public companies and their executives must provide accurate and complete information when making disclosures to investors, no matter the circumstances.”

The SEC said Boeing and Muilenburg knew the Maneuvering Characteristics Augmentation System, known as MCAS, posed a risk but publicly promised the plane was safe.

After the shock of Lion Air Flight 610 off Indonesia on October 29, 2018, Boeing said in a press release that “the 737 Max is as safe as any aircraft that has ever taken to the skies.” By this time, the company and its CEO already knew that the MCAS system had a problem and had begun to redesign it, facts that they left out of the announcement that Muilenburg himself edited, according to the SEC.

Less than five months after that accident, Ethiopian Airlines Flight 302 crashed shortly after takeoff near Addis Ababa, killing all 157 people on board.

The SEC alleged that Boeing also falsely claimed that there were no loopholes in the plane’s certification process in the first place.

“Broad and deep changes”

Boeing, which has neither admitted nor denied wrongdoing as part of the SEC settlement, told CBS MoneyWatch that it has improved its safety processes after the accidents.

“We will never forget the people lost on Lion Air Flight 610 and Ethiopian Airlines Flight 302, and we have made sweeping and profound changes to our company in response to those accidents, fundamental changes that have strengthened our safety processes and oversight.” safety issues, and have enhanced our culture of safety, quality and transparency,” a company spokesperson said in a statement.

He added that the deal “serves the best interests of our shareholders, employees and other stakeholders.”

Last year, Boeing paid $2.5 billion to liquidate criminal charges brought by the Department of Justice that he defrauded safety regulators in connection with the development of the 737 Max. Most of that money went to airlines whose 737 Max planes were grounded for nearly two years following the Lion Air and Ethiopian Airlines crashes. The Chicago-based planemaker also settled a shareholder lawsuit last year over $237 million.

A house report in 2020 found that both Boeing and the Federal Aviation Administration failed to protect the public, despite several Boeing engineers and test pilots raising concerns about the safety of the MCAS system.

Associated Press contributed reporting.

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