The US Securities and Exchange Commission (SEC) said Boeing misled investors about the safety of its 737 Max airliner. As noted by the SEC, the company continued to make false claims even after two plane crashes involving the 737 Max. Boeing was ordered to pay $200 million to settle the claims, the company agreed.
According to the SEC, Boeing and then-CEO Dennis Muilenburg knew after the first crash that the 737 MAX’s Maneuvering Correction System (MCAS) was causing “aircraft safety issues.” However, the corporation assured the public that the liner “is as safe as any other aircraft that has ever flown in the sky.” After the second crash, Boeing and Mr. Muilenburg claimed that there were no “gaps” in the MCAS certification process, although they knew full well that this was not the case.
The SEC clarifies that a month after the October 2018 737 MAX crash in Indonesia, Boeing issued a press release edited and approved by Dennis Muilenburg. The document “selectively highlighted facts” from an official report by the Indonesian government, which suggested that pilot error and poor aircraft maintenance were the cause of the crash. In a press release, Boeing also “assured that the aircraft was safe,” but the company did not disclose the results of an internal security review that showed problems with MCAS. By that time, Boeing had already begun to redesign the system, but did not talk about it.
Nearly six weeks after the March 2019 crash of another 737 MAX and the ensuing ban on all those aircraft, Mr. Muilenburg has publicly denied problems with the aircraft’s certification. The SEC notes that it was aware of information “calling certain aspects of the certification process” of MCAS. However, he told analysts and journalists that “there was nothing that would escape (from attention.— “b”) in the certification process,” and Boeing supposedly double-checked everything and confirmed that it “accurately followed all those steps in the design and certification process that allow us to produce safe aircraft.”
“Boeing and Muilenburg put profits higher (interests.— “b”) people by misleading investors about the safety of the 737 MAX in order to rehabilitate Boeing’s image after two tragic accidents that resulted in 346 deaths and untold grief for many families,” said SEC Enforcement Director Gurbir Gruel. He stressed that public companies and their leaders “must provide accurate and complete information to investors, regardless of the circumstances,” otherwise they will be held accountable.
The SEC found that Boeing and Dennis Muilenburg violated federal anti-fraud laws. The defendants “did not acknowledge or refute” the commission’s findings, but agreed to pay $200 million and $1 million in fines, respectively. The money will be transferred to a fund that will be created “in the interests of affected investors.”
The operation of the Boeing 737 MAX was suspended in 2019. The investigation revealed violations during the creation of the aircraft, and also found negative reviews about it from the employees of the corporation during its development. Operation of the 737 MAX resumed in December 2020. In October 2021, the first criminal charge was filed in connection with two 737 MAX crashes. Boeing managed to avoid criminal prosecution by entering into an agreement with the Department of Justice, under which the concern agreed to pay $ 2.5 billion in fines and compensation. In May 2022, relatives of those who died in the crashes announced that they wanted to get the agreement cancelled.