Boeing, whose second quarter 2022 revenue neared $17 billion, must pay millions of dollars to settle charges after the company and its former CEO allegedly misled investors following two fatal 737 MAX crashes.
The October 2018 and March 2019 crashes resulted in the deaths of all 346 passengers and flight crews aboard the airplanes, leading to a brief, temporary worldwide grounding of the aircraft.
On Thursday, the Securities and Exchange Commission (SEC) ordered Boeing to pay $200 million and its then-CEO Dennis Muilenburg to pay $1 million for the company’s role in allegedly misleading investors in the wake of the crashes.
“Boeing and Muilenburg put profits over people by misleading investors about the safety of the 737 MAX, all in an effort to rehabilitate Boeing’s image following two tragic accidents that resulted in the loss of 346 lives and incalculable grief to so many families,” Gurbir S. Grewal, director of the SEC’s enforcement division, said in a statement.
“In times of crisis and tragedy, it is especially important that public companies and executives provide full, fair, and truthful disclosures to the markets. The Boeing Company and its former CEO, Dennis Muilenburg, failed in this most basic obligation,” said SEC Chair Gary Gensler.
Apparently failing to provide adequate leadership following the grounding of the 737 MAX aircraft, Muilenberg was ultimately fired in 2019 for comments he made that tarnished the manufacturer’s relationship with the Federal Aviation Administration (FAA), according to the company. The grounding was lifted in late 2020.
Even though Boeing and Muilenburg neither admitted nor denied the SEC’s findings, the company has agreed to resolve the settlement, according to the federal agency.
“Today’s settlement is part of the company’s broader effort to responsibly resolve outstanding legal matters related to the 737 MAX accidents in a manner that serves the best interests of our shareholders, employees, and other stakeholders,” Boeing said in a statement.
The SEC is not the only agency to investigate Boing for the deadly crashes. In January 2021, Boeing agreed to pay $2.5 billion to settle charges made after a criminal probe by the Justice Department. The airplane manufacturer was charged with concealing information about the aircraft’s onboard software from regulators who had initially approved the planes.
Besides faulty onboard software, two congressional investigations determined the 737 MAX’s development and certification processes suffered management, design, and regulatory lapses. The investigation of the aircraft later led to legislation to reform aircraft certification.
A Fair Fund will be established for the benefit of harmed investors, according to the SEC statement.
Boeing deliberately covered up a design and software flaw in the name of profits, while 386 people died. They should all be in jail.