American planemaker Boeing Co. together with its former CEO Denis Muilenburg have agreed to pay the American Securities and Exchange Commission (SEV) a fine of US$200 million for having misled the public over the two fatal crashes of its 737 MAX jet.
The SEC has alleged that both Boeing and Muilenburg knew that there was a problem with the flight control system after the first crash involving a Lion Air jet which resulted in the death of 189 passengers and crew, and that it represented an ongoing concern. Despite this, they made it clear that as far as they were concerned, the plane was safe to fly. However, after the second crash in March 2019 involving an Ethiopian Airlines MAX jet, the SEC has also alleged that both Boeing and Muilenburg knowingly misled the public about “slips” and “gaps” in the certification process of that flight control system.
“In times of crisis and tragedy, it is especially important that public companies and executives provide full, fair, and truthful disclosures to the markets,” said SEC Chair Gary Gensler in a statement reported by Reuters news agency. “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.”
In a statement, Boeing said that the settlement “fully resolves the SEC’s previously disclosed inquiry into matters relating to the 737 MAX accidents.” The company and Muilenburg agreed to settle charges of violating the antifraud provisions of U.S. securities laws, but they did not admit or deny the SEC’s allegations. Boeing agreed to pay a US$200 million settlement and Muilenburg agreed to pay US$1 million.
According to Gurbir Grewal, director of the SEC’s Enforcement Division, “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.” (£1.00 = US$1.09 at time of publication).