Boeing Pays $200 Million In Settlement Over Misleading Investors On 737 Max Safety

Boeing shares have fallen 68% from their all-time high set just before the second MAX incident in early March 2019. Furthermore, Boeing is paying $200 million in settlement over misleading investors on the 737 Max’s safety.

Boeing Pays $200 Million In Settlement Over Misleading Investors On 737 Max Safety

In response to claims that the aircraft maker and its former CEO misled investors and the general public about the safety of the 737 MAX airliner, which crashed twice and killed 346 people, Boeing Co. negotiated a $200 million agreement with the Securities and Exchange Commission on Thursday.

Former CEO of Boeing Dennis Muilenburg consented to pay the SEC $1 million as part of a settlement. The SEC claims that following the initial 737 MAX incident, Muilenburg was aware of a flight control feature known as the Maneuvering Characteristics Augmentation System as a persistent safety concern but reassured the public that the aircraft was airworthy.

Here is a description of how the MCAS operates:

Boeing Pays $200 Million In Settlement Over Misleading Investors On 737 Max Safety 2

Following the second incident, Muilenburg and Boeing informed the public that there were holes in the MCAS flight control system certification procedure, despite the SEC suggesting “contrary information.”

“In times of crisis and tragedy, it is especially important that public companies and executives provide full, fair and truthful disclosures to the markets,” SEC Chairman Gary Gensler wrote in a statement. He said Muilenburg and Boeing “failed in this most basic obligation” to be “full, fair, and truthful in disclosures to the markets.”

“They misled investors by providing assurances about the safety of the 737 MAX, despite knowing about serious safety concerns,” Gensler continued.

The settlement disclosed by the SEC on Thursday is predicated on claims made to Wall Street by the former executive and aircraft company.

The Justice Department discovered in a separate criminal investigation that a former Boeing pilot misled aviation safety authorities about how the MAX’s MCAS functioned. In a court deal with the DOJ, Boeing agreed to pay $2.5 billion, with a portion of that sum going to the relatives of those who perished in the two MAX crashes.

“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,” said Gurbir S. Grewal, Director of the SEC’s Enforcement Division.

Current and past firm directors accepted a $237.5 million settlement with shareholders last year on the board’s failure to oversee the MAX.

Meanwhile, Boeing shares have fallen 68% from their all-time high set just before the second MAX incident in early March 2019.

Boeing Pays $200 Million In Settlement Over Misleading Investors On 737 Max Safety 3

Boeing’s best-selling aircraft was suspended for 20 months before flying again in November 2020.

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