US sues Boeing with misleading investors over 737 Max Safety, fined $200 million

US regulators say Boeing and its ex-CEO have ‘put the profits on people’, misleading the public about the safety of the 737 MAX

New York (AFP) – US securities officials have fined Boeing $200 million over misleading assurances from the airline giant about the safety of its 737 Max jet after two fatal crashes, regulators announced Thursday.

The Securities and Exchange Commission said in a statement that Boeing agreed to the penalty to settle charges that it “negligently violated the anti-fraud provisions” of US securities laws, saying the company and its president “put profits on people.”
Former Boeing CEO Dennis Muilenburg has also agreed to pay $1 million to settle the same fees in the civil case.

The settlement marks Boeing’s latest blow to the Max after the Lion Air crash in Indonesia in October 2018 and the Ethiopian Airlines crash in Ethiopia in March 2019, which killed nearly 350 people.

One month after the first accident, a Boeing press release approved by Muilenburg “selectively highlighted certain facts,” implying that pilot error and poor aircraft maintenance contributed to the crash.

The press release also testified to the aircraft’s safety, not revealing that Boeing knew of a key flight handling system, the Maneuvering Characteristics Augmentation System (MCAS), that posed safety issues and was redesigned.

The SEC said that after the second crash, Boeing and Muilenburg assured the public that there was “no surprise or gap” in Max’s federal certification even though they knew there was dissenting information.
– Boeing ‘failed’ –
“In times of crisis and tragedy, it is especially important that public companies and CEOs provide full, fair and honest disclosures to markets,” said Gary Gensler, president of the SEC, in a press release.

Boeing and its former CEO Dennis Muilenburg failed in this basic commitment. They misled investors by offering assurances about the safety of the 737 Max, despite knowing of serious security concerns. ”
By agreeing to pay the fines, both Boeing and Muilenburg have neither acknowledged nor denied the agency’s findings, the Securities and Exchange Commission said.

Boeing said the agreement “fully resolves” the Securities and Exchange Commission’s inquiry and is part of the company’s “wider effort to resolve outstanding legal issues related to 737 Max accidents in a responsible manner in a manner that serves the interests of our shareholders, employees and other stakeholders,” a company spokesperson said.

“We will never forget those who went missing on Lion Air Flight 610 and Ethiopian Airlines Flight 302, and we have made extensive and profound changes across our company in response to those incidents.”
US air safety authorities have allowed the Boeing 737 Max to resume service in November 2020 after a 20-month hiatus following accidents.

The main cause of the two collisions was identified as MCAS, which was supposed to prevent the plane from coming to a stop on ascent but instead push the plane’s nose down. The Federal Aviation Administration has asked Boeing to update this system to address the flaw.
In January 2021, Boeing agreed to pay $2.5 billion to settle a US criminal charge over allegations that the company hijacked regulators overseeing the 737 MAX.