Boeing agreed Thursday to pay $200 million to settle Securities and Exchange Commission charges that it misled investors after two deadly 737 MAX crashes killed 346 people and brought its fleet to a 20-month standstill—the latest settlement struck by Boeing after the 737 disaster.
The SEC charged Boeing and its former CEO Dennis Muilenburg with making “materially misleading public statements” in the wake of two crashes of its 737 MAX in 2018 and 2019.
The SEC alleges that Boeing and Muilenburg knew the first crash was caused partly by a malfunctioning flight control feature that posed an “ongoing airplane safety issue,” but still told the public the plane was “as safe as any airplane that has ever flown the skies,” blaming the crash instead on pilot error and poor aircraft maintenance.
After the 2019 crash, the SEC says Boeing defended the processes to certify the 737 MAX even though Muilenburg was “aware of information calling into question certain aspects of the certification process.”
In addition to the $200 million the company must pay, Muilenburg, who was CEO at the time of the crashes before he was fired in December 2019, also agreed to pay $1 million.
Boeing did not admit or deny any of the SEC’s allegations, the regulator said.
It’s the latest financial settlement after the 737 MAX crashes, following Boeing’s agreement in 2021 to pay $2.5 billion to resolve federal criminal charges that it misled the Federal Aviation Administration, and a $237.5 million settlement in April by the company’s board of directors.
In a statement to Forbes, a company spokesperson said the settlement is part of Boeing’s “broader effort to responsibly resolve outstanding matters related to the 737 MAX accidents” to best serve its “shareholders, employees and other stakeholders.”
All 737 MAX jets—Boeing’s latest version of its best-selling plane—were grounded worldwide after a deadly March 2019 crash in Ethiopia, which came roughly five months after another crash in Indonesia. Both crashes were caused by a faulty sensor in the flight control system that pushed the nose of the plane downwards. The Federal Aviation Administration cleared the planes to fly again nearly 20 months later, after a round of test flights following changes to its software to prevent the downward push. A spokesperson told Forbes Boeing has made “broad and deep changes” in response to the crashes, including by implementing a heightened safety process and more oversight. Last year’s $237.5 million shareholder settlement also resulted in the company hiring a third-party ombudsman and adding a member to its board of directors with experience in aviation, engineering and product safety oversight. However, Boeing lost nearly $12 billion in 2020 after it halted deliveries of its 737 MAX jets and the Covid-19 pandemic brought travel to a standstill.
“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,” SEC Chair Gary Gensler said in a press release.
Boeing to Pay $200 Million to Settle SEC Investigation Related to 737 MAX Crashes (Wall Street Journal)
By Brian Bushard, Forbes Staff