Boeing Pays $200 Million to Settle Misleading Investor Charges in 737 Max Plane Crashes

Boeing has agreed to pay $200 million to settle the charges it and its former CEO Dennis Muilenburg made “materially misleading public statements” after two fatal crashes of Boeing 737 Max planes in 2018 and 2019, the Securities and Exchange Commission Thursday.

In October 2018, a new 737 Max flying in front of Lion Air crashed near Jakarta, Indonesia, killing 189 people. Just five months later, in March 2019, a new 737 Max flying for Ethiopian Airlines crashed just after takeoff from Addis Ababa, Ethiopia, killing 157 people.

The 737 Max’s Maneuver Characteristics Augmentation System (MCAS) was involved in the plane crashes. The SEC claimed that after the initial crash, “Boeing and Muilenburg knew that MCAS was an ongoing safety concern, but nonetheless assured the public that the 737 MAX aircraft was ‘as safe as any aircraft ever flown through the air.'”

After the second crash, the SEC claims that: Boeing and Muilenburg continued to assure the public through press releases and public statements that “there were no errors or gaps in the certification process related to MCAS, despite being aware of conflicting information.”

The SEC found that Boeing had negligently violated the anti-fraud provisions of the federal securities laws. The $200 million will set up a fund for aggrieved investors in Boeing.

“There are no words to describe the tragic loss of life caused by these two plane crashes,” SEC chairman Gary Gensler said in a statement on Thursday. “In times of crisis and tragedy, it is especially important that publicly traded companies and executives provide complete, fair and truthful information to the markets. The Boeing Company and its former CEO, Dennis Muilenburg, have failed to fulfill this most fundamental obligation. They have misled investors by providing assurances about the safety of the 737 MAX, despite being aware of serious safety concerns.”

In addition to Boeing’s $200 million, Muilenburg has agreed to pay $1 million in a settlement with the SEC.

“We will never forget those lost on Lion Air Flight 610 and Ethiopian Airlines Flight 302 and we have made broad and profound changes to our business in response to those accidents – fundamental changes that have strengthened our safety processes and oversight of safety issues , and have enhanced our culture of safety, quality and transparency,” Boeing told CNET in an emailed statement.

In settling in, Bowing is neither admitting nor denying the SEC’s findings. “The settlement announced today completely resolves the SEC’s previously disclosed investigation into matters related to the 737 MAX accidents,” Boeing added.

Three days after the second crash, former US President Trump forced the FAA to follow other countries ground all Boeing 737 Max aircraft, which means they are not allowed to carry passengers. The 737 Max grounded until December 2020.

Boeing had already agreed to pay $2.5 billion in January 2021 after being accused of fraud by the Federal Aviation Administration over the evaluation of the 737 Max aircraft. The company too paid $17 million in fines after the FAA discovered it was installing equipment with unapproved sensors in hundreds of 737 Max and NG aircraft.