Boeing will pay the US Securities and Exchange Commission $200 million to resolve civil claims that it manipulated investors about the 737 MAX, which was grounded for 20 months after two catastrophic accidents killed 346 people, the agency announced Thursday.
The SEC also stated that former Boeing CEO Dennis Muilenburg has agreed to pay $1 million.
“In times of crisis and tragedy, it is essential that public companies and executives provide full, fair, and truthful disclosures to the markets,” SEC Chair Gary Gensler said in a statement. He added that Boeing and Muilenburg “failed in this most basic obligation.”
According to the SEC, Boeing and Muilenburg did not confirm or deny the SEC’s claims. According to the regulatory agency, a fund will be formed to help damaged investors.
The SEC sued Boeing and Muilenburg for “making materially false public statements following accidents of Boeing planes in 2018 and 2019.”
Boeing announced without admitting or denying wrongdoing. However, according to the company, it has made “fundamental improvements that have strengthened our safety practises,” and the “settlement is part of the company’s larger commitment to adequately resolve remaining legal concerns connected to the 737 MAX incidents.”
The crashes were attributed to the Maneuvering Characteristics Augmentation System, a flight control system (MCAS). “After the first crash, Boeing and Muilenburg knew that MCAS constituted an ongoing aviation safety risk, but yet guaranteed the public that the 737 MAX plane was ‘as safe as any that has ever flown the skies,'” according to the SEC.
Following the second incident, the SEC stated that “despite being aware of contrary information, Boeing and Muilenburg told the public that there were no lapses or holes in the certification process with respect to MCAS.”
In January 2021, Boeing agreed to pay $2.5 billion in fines and reparations to settle a formal investigation over the 737 MAX crashes launched by the US Justice Department.
The Justice Department deal, which enabled Boeing to avoid prosecution, includes a $243.6 million fine, $1.77 billion in airline compensation, and a $500 million crash-victim fund for fraud conspiracy charges stemming from the plane’s defective design.
Boeing sacked Muilenburg in December 2019 after the firm argued with regulators over the timing of the 737 MAX’s resumption to service.
“Boeing and Muilenburg put profits over people by misleading investors about the safety of the 737 MAX all 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 Grewal, director of the SEC’s Enforcement Division.