Boeing Co. will pay $200 million to settle accusations that the company and its former CEO misled investors about the safety of its 737 Max after two of the jetliners crashed, killing 346 people.
The Securities and Exchange Commission said Thursday it has accused aircraft manufacturer and former CEO Dennis Muilenburg of making material misleading public statements about the plane and an automated flight-control system involved in the crashes in Indonesia and in Ethiopia.
Neither Boeing nor Muilenburg admitted wrongdoing, but they offered to settle and pay fines, including $1 million to be paid by Muilenburg, who was ousted in December 2019, nine months after the second accident.
The SEC said Boeing and Muilenburg knew the flight system, known as MCAS, posed a safety concern, but promised the public the plane was safe. The SEC said it also incorrectly asserted that there were no flaws in the plane’s certification process in the first place.
“Boeing and Muilenburg put profits before people by misleading investors about the safety of the 737 Max in an effort to rehabilitate Boeing’s image” after the crashes, said Gurbir Grewal, director of the application division of the SEC.
Boeing said it has made “broad and deep changes in our business in response to these accidents” to improve safety and quality.
“Today’s settlement is part of the company’s broader efforts to responsibly resolve outstanding legal issues related to the 737 Max accidents in a manner that best serves the interests of our shareholders, employees and others. stakeholders,” the Arlington, Va.-based company said.
A new Max operated by Indonesian Lion Air crashed into the Java Sea in October 2018, and another Max flown by Ethiopian Airlines plunged into the ground near Addis Ababa in March 2019. With each crash, MCAS pushed the nose down after getting faulty readings from a single sensor, and the pilots were unable to regain control.
The crashes led regulators around the world to ground the plane for nearly two years until Boeing made fixes to the flight control system, which was designed to help prevent aerodynamic stalls when the nose points. too suddenly. Neither plane that crashed was in danger of stalling.
The SEC accused Boeing of misleading investors in a press release after the crash in Indonesia, which said the plane was “as safe as any plane that has ever flown in the sky”. Boeing knew when it made the claim that MCAS should be fixed and was already designing changes, the SEC said.
After the crash in Ethiopia, Muilenburg said on a call with investors and Wall Street analysts and at Boeing’s annual shareholder meeting that the company followed the normal process to have the plane certified by regulators. But by then, Boeing — in response to a subpoena from federal prosecutors — had already found documents indicating it had failed to disclose key facts about MCAS to the Federal Aviation Administration, the SEC charged. .
Boeing reached a separate $2.5 billion settlement with the Justice Department last year. Most of that money went to the airlines whose Max jets were grounded.