Boeing has agreed to pay $200 million to settle charges from the Securities and Exchange Commission (SEC) that Boeing misled investors about the safety of the 737 Max, even doing so after two crashes that killed 346 people.
Former Boeing CEO Dennis Muilenberg also consented to a $1 million fine, though neither he nor the company admitted wrongdoing.
“There are no words to describe the tragic loss of life brought about by these two airplane crashes,” SEC chair Gary Gensler said, referencing the Lion Air and Ethiopian Airlines crashes in October 2018 and March 2019, respectively.
“In times of crisis and tragedy, it is especially important that public companies and executives provide full, fair, and truthful disclosures to the markets. 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.”
Boeing did not immediately respond to a request for comment.
The crashes of Lion Air Flight 610 and Ethiopian Airlines Flight 302 were caused by the 737 Max’s automated flight control system, known as MCAS. In both crashes, a faulty sensor erroneously activated MCAS repeatedly, causing the planes to nosedive.
The second crash led to a 20-month global grounding of the Max while Boeing updated the flight control system.
In early 2021, Boeing agreed to pay $2.5 billion to settle federal criminal fraud charges that it deceived the FAA in connection with the agency’s evaluation of the Max.
Thursday’s SEC order was related to a press release that Boeing, with Muilenberg’s approval, issued after the Lion Air crash, the SEC said. The release gave assurances of the aircraft’s safety while failing to disclose that Boeing had already begun redesigning the MCAS after an internal review determined that it was an ongoing safety issue.
The SEC also cited Muilenberg for asserting six weeks after the Ethiopian Airlines crash that the company had adhered to its proper design and certification process during Max development.
The ex-Boeing CEO was aware at that time of information that raised questions about aspects of the certification process, the SEC said.
Robert Clifford, whose Clifford Law Offices represents the families of 70 people who perished in Ethiopian flight 302, called for more accountability against Muilenberg in a statement issued Thursday evening.
“Muilenburg or anyone else who persuaded the government to keep the Max 737 Boeing flying should be fully investigated for conduct that could be criminal in nature,” Clifford said.
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