Boeing and its former CEO Dennis Muilenburg agreed to pay hefty fines to settle charges from 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 SEC says that after a Lion Air 737 Max crash in October 2018 that killed 189 people, Boeing and Muilenburg knew part of the plane’s flight control system posed an ongoing safety concern, but told the public the 737 Max was safe. fly Following the fatal crash of the 737 Max on March 10, 2019, the SEC alleged that Boeing and Muilenburg knowingly misled the public about “slippages” and “loopholes” in the flight control system’s certification process.
“In times of crisis and tragedy, it is especially important that public companies and executives provide complete, fair and true information to the markets,” SEC Chairman Gary Gensler said in a statement. “The Boeing Company and its former CEO, Dennis Muilenburg, failed in this fundamental duty. Investors were misled by assurances about the safety of the 737 MAX, despite knowledge of serious safety concerns.”
In a statement, Boeing said the settlement “fully resolves the SEC’s previously disclosed inquiry regarding matters related to the 737 MAX crashes.”
“Today’s settlement is part of the company’s broader effort to proactively resolve outstanding legal issues related to the 737 MAX accidents in a manner that serves the interests of our shareholders, employees and other stakeholders,” Boeing said.
The company and Muilenburg agreed to settle charges of violating the anti-fraud provisions of US securities laws, but did not admit or deny the SEC’s allegations. Boeing agreed to pay a $200 million settlement, and Muilenburg agreed to pay $1 million.
“Boeing and Muilenburg are profiting by misleading investors about the safety of the 737 Max in an effort to rehabilitate Boeing’s image after two tragic crashes that resulted in the loss of 346 lives and incalculable grief for so many families,” said Gurbir Grewal. , director of the SEC’s Division of Enforcement in a statement.
The fines, while large, pale in comparison to the financial assault Boeing has faced over the years over the 737 Max. Boeing’s reported losses have reached tens of millions of dollars, which does not take into account the company’s ongoing legal exposure.
Shares of Boeing ( BA ) fell more than 3% on Thursday but rose slightly in after-hours trading following the SEC announcement.