Boeing is to pay $200 million after the US Securities and Exchange Commission charged the company over “materially misleading” statements following two fatal 737 Max crashes.
The US stock market regulator announced penalties imposed on the US aircraft maker and its former chief executive Dennis Muilenburg for “putting profits over people”.
The new generation 737 Max was grounded for 20 months following two crashes which killed 346 people involving Lion Air in Indonesia in 2018 and Ethiopian Airlines in 2019.
Muilenburg will pay $1 million as part of the settlement.
The SEC said its orders against Boeing and Muilenburg “find that they negligently violated the antifraud provisions of federal securities laws.
“Without admitting or denying the SEC’s findings, Boeing and Muilenburg consented to cease-and-desist orders that include penalties of $200 million and $1 million, respectively.”
According to the SEC’s orders, after the first crash, Boeing and Muilenburg knew that a flight control function called the Manoeuvering Characteristics Augmentation System (MCAS) posed an ongoing safety issue.
But they assured the public that the 737 Max was “as safe as any airplane that has ever flown the skies.”
Later, following the second crash, Boeing and Muilenburg assured the public that there were no slips or gaps in the certification process with respect to MCAS, despite being aware of contrary information, the SEC said.
Gurbir Grewal, director of the SEC’s enforcement division, added: “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.
“But public companies and their executives must provide accurate and complete information when they make disclosures to investors, no matter the circumstances. When they don’t, we will hold them accountable, as we did here.”
SEC chair Gary Gensler said: “There are no words to describe the tragic loss of life brought about by these two airplane crashes.
“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.
“They misled investors by providing assurances about the safety of the 737 Max, despite knowing about serious safety concerns.”
A fund will be established for the benefit of harmed investors.
Boeing said in response: “We will never forget those lost on Lion Air Flight 610 and Ethiopian Airlines Flight 302, and we have made broad and deep changes across our company in response to those accidents.
“Fundamental changes that have strengthened our safety processes and oversight of safety issues, and have enhanced our culture of safety, quality, and transparency.”