Tuesday, September 27, 2022
Home BUSINESS Boeing reaches $200 million settlement with regulators for its 737 Max

Boeing reaches $200 million settlement with regulators for its 737 Max

Boeing reached a $200 million settlement with US securities regulators on Thursday to settle an investigation into claims that the planemaker and a former chief executive had misled investors about problems with their plane. 737 Max that caused two fatal accidents in 2018 and 2019.

The company’s CEO at the time, Dennis A. Muilenburg, agreed to pay a $1 million fine as part of a separate settlement with the Securities and Exchange Commission, even though the facts of the case were basically the same.

in the settlement agreement The SEC said Boeing and Muilenburg had misled investors after the first plane crashed in Indonesia in 2018 by suggesting human error was to blame and by ignoring the company’s own concerns with the flight control system. of the airplane. of the planes after a second plane crashed in Ethiopia a few months later, the SEC said.

“In times of crisis and tragedy, it is especially important that public companies and executives provide full, fair and truthful information to the markets,” SEC Chairman Gary Gensler said in a statement. “The Boeing Company and its former CEO, Dennis Muilenburg, failed to meet this basic obligation.”

The company settled without admitting or denying the facts of the case. In a statement, Boeing said it had improved “safety processes and oversight of safety issues” since the accidents and that the agreement was part of a “wider effort to responsibly resolve outstanding legal issues” related to the Max. .

“We will never forget those lost on Lion Air Flight 610 and Ethiopian Airlines Flight 302, and we have made broad and profound changes across our company in response to those accidents,” Boeing said.

Last year, the planemaker reached a $2.5 billion settlement with federal prosecutors as part of a deferred prosecution agreement. That settlement resolved a criminal charge that Boeing had conspired to defraud the Federal Aviation Administration and provided restitution to the families of the 346 people who died in the two crashes.

After the second crash in early 2019, Max was banned worldwide for almost two years. The plane resumed flight in late 2020 after Boeing made changes to the plane, including MCAS, the flight control system behind the crashes. The Max has carried millions of passengers since then. It has also enjoyed strong sales since it resumed flying, including an order for 100 planes from Delta Air Lines this summer.

The SEC noted that following the Lion Air accident, Mr. Muilenburg had approved a press release that failed to disclose that an internal review at Boeing had found an ongoing safety issue with the planes. In that statement, Boeing suggested that the plane had crashed due to pilot error or due to poor maintenance by Lion Air.

In the settlement, regulators said Boeing continued to sell bonds to investors despite misleading statements it had made about the safety of Max planes. It is a violation of federal securities law to sell bonds or stocks while providing investors with misleading information that could be related to their decision to invest.

The SEC order requires Boeing to cease and desist from actions related to the Max accidents that could further mislead investors.

Families of some of those who died in the crashes have criticized the Justice Department for accepting the settlement, accusing it of failing to protect victims’ rights. Some of the families are also trying to raise awareness of their continuing concerns about the plane’s safety, including what they describe as a major and necessary overhaul of their pilot alert system.

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