Boeing to pay $200 million fine for misleading investors about 737 Max

Boeing and former chief executive Dennis Muilenburg have agreed to pay millions of dollars to settle allegations they misled investors about two deadly crashes of the company’s 737 Max planes.

The aerospace manufacturer has agreed to pay a $200 million fine to settle allegations of United States Securities and Exchange Commission, while Muilenburg will pay $1 million. Neither the company nor Muilenburg acknowledged or denied the SEC’s findings.

Settlements stem from several collisions in 2018 and 2019 off the coast of Indonesia and Ethiopia. The total number of accidents killed 346 people.

The cause was determined to be the flight control system was wrong and repeatedly pushed the nose of the Max down. Boeing was later found to have deceiving regulators and pilots about the new system as it managed to win Federal Aviation Administration approval without having to undertake costly new training measures.

Boeing last year agreed pay 2.5 billion dollars to resolve a criminal fraud charge brought by the United States Department of Justice. The company admitted guilt as part of a deferred prosecution agreement, meaning that if the plane maker operated a compliance program for three years, prosecutors would dismiss the case against the corporation.

The settlement announced by the SEC on Thursday addresses claims made with Wall Street.

“In times of crisis and tragedy, it is especially important that public companies and executives provide complete, fair and honest information to the market,” said SEC Chairman Gary Gensler. . “The Boeing Co and its former CEO, Dennis Muilenburg, failed in this most basic obligation”.

Boeing issued a press release a month after Lion Air Flight 610 crashed in the Java Sea in 2018. According to the SEC, Muilenburg read the draft and proposed cutting the reference to a “software update” for the system. Faulty flight control system, which the company has begun redesigning. He also directed staff to add sections of an Indonesian government report that pilot error was “selectively highlighted” and that poor aircraft maintenance were factors in the crash.

The executive was also made aware of information “in question” about the FAA process for certifying the 737 Max following the crash of Ethiopian Airlines Flight 302 in March 2019, the SEC said.

Internal Boeing lawyers told Muilenburg in January 2019 that then-chief technical pilot Mark Forkner texted in 2016 that he had “lie (unintentionally) to regulators” about the characteristics of the flight control system. An internal committee also raised questions about whether the company had properly explained the system to FAA regulators.

However, Muilenburg told reporters and analysts in April 2019 that “there are no surprises or gaps at all. . . that somehow slipped through [the] certification process” for the 737 Max, the securities regulator said. Muilenburg added at the time that Boeing had “come back and confirmed again. . . that we have followed the exact steps of our design and certification process to consistently create safe aircraft.”

Muilenburg, who was Fired from Boeing in December 2019, could not be immediately reached for comment.

Boeing said the company “will never forget” those killed in the crashes and that it had “made sweeping changes throughout our company to respond to those crashes – fundamental change has strengthened our safety procedures and monitoring of safety issues.”

The FAA returned Max to the skies in November 2020.

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