To resolve allegations that it deceived investors about the safety of its 737 Max airplanes after two of the aircraft crashed, killing 346 people, Boeing will pay $200 million.
To resolve allegations that Boeing Co. and its previous CEO deceived investors about the safety of the 737 Max after two of the aircraft crashed, killing 346 people, the corporation will pay $200 million.
The aircraft manufacturer and former CEO Dennis Muilenburg were accused by the Securities and Exchange Commission on Thursday of making materially false public statements about the aircraft and an automated flight-control system that were linked to the crashes in Indonesia and Ethiopia.
Muilenburg, who was fired in December 2019—nine months after the second crash—did not admit guilt, but Boeing and Muilenburg proposed to settle and pay fines, including $1 million that Muilenburg would be responsible for paying.
The MCAS flight system, according to the SEC, was a safety concern even though Boeing and Muilenburg assured the public that the aircraft was secure. The SEC said that they further misrepresented the fact that there were no holes in the initial certification procedure for the aircraft.
To repair Boeing's reputation after the crashes, "Boeing and Muilenburg put profits over people by deceiving investors about the safety of the 737 Max," claimed Gurbir Grewal, director of the SEC's enforcement division.
According to Boeing, it has improved safety and quality by implementing "wide and profound changes across our firm in reaction to those events."
The company, which has its headquarters in Arlington, Virginia, said that the 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."
In October 2018, a brand-new Max flown by Indonesia's Lion Air crashed into the Java Sea, and in March 2019, an Ethiopian Airlines Max crashed into the ground close to Addis Ababa. Each time an accident occurred, MCAS drove the nose down as a result of receiving inaccurate data from a single sensor, leaving the pilots helpless to retake control.
Until Boeing fixed the flight-control system, which was intended to assist prevent aerodynamic stalls when the nose points up too high, regulators around the world grounded the aircraft for nearly two years. Both of the crashed aircraft were not at risk of stalling.
After the tragedy in Indonesia, Boeing issued a press release claiming the aircraft was "as safe as any airplane that has ever flown the skies," and the SEC accused Boeing of deceiving investors. According to the SEC, Boeing was already engineering adjustments when it made that claim and was aware that MCAS would need to be repaired.
Following the Ethiopian tragedy, Muilenburg claimed during a conference call with investors and Wall Street analysts as well as at Boeing's annual shareholder meeting that the business had adhered to the standard procedure for obtaining the plane's certification from authorities. However, the SEC said that at that time Boeing had already discovered records showing that it had failed to submit important information concerning MCAS to the Federal Aviation Administration in response to a demand from federal prosecutors.
Boeing and the Justice Department settled separately for $2.5 billion last year. Airlines whose Max planes were grounded received the majority of the money.
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