Boeing will pay 0 million to settle US charges that misled investors over the 737 Max

Boeing will pay $200 million to settle US charges that misled investors over the 737 Max

Written by David Shepardson

WASHINGTON (Reuters) – Boeing Co will pay $200 million to settle civil charges from the U.S. Securities and Exchange Commission (SEC) that misled investors about the 737 Max jet, which has been grounded for 20 months after two fatal crashes that killed 346 people, Boeing said on Thursday. .

In announcing the settlement, the SEC said Boeing (NYSE:) learned after the first incident that the flight control system posed a safety issue, but assured the public that the 737 Max was “as safe as any aircraft that has ever flown in the sky.” .

The Securities and Exchange Commission also said former Boeing CEO Dennis Muilenburg agreed to pay $1 million to settle the fees.

The agency said Boeing and Muilenburg did not acknowledge or deny the Securities and Exchange Commission’s findings. She added that a fund will be established for the benefit of the affected investors.

Boeing shares rose 0.4 percent in after-hours trading.

β€œIn times of crisis and tragedy, it is especially important that public companies and CEOs provide full, fair and honest disclosures to the markets,” Gary Gensler, president of the SEC, said in a statement. He said Boeing and Muilenburg “failed on this basic commitment”.

The Securities and Exchange Commission accused Boeing and Muilenburg of “making materially misleading public statements following Boeing crashes in 2018 and 2019”.

Boeing, which indicated that it did not admit or deny wrongdoing in the settlement agreement, said it had made “material changes that strengthened our safety procedures” and said that “the settlement is part of the company’s broader efforts to resolve outstanding legal issues related to liability over 737 Max accidents.” “.

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The accidents have been linked to a flight control system called the Maneuverability Characteristics Enhancement System (MCAS). “After the first incident, Boeing and Muilenburg learned that MCAS presented an ongoing aircraft safety issue, but nonetheless assured the public that the 737 Max was ‘as safe as any aircraft that has ever flown’,” the SEC said.

The first Lion Air crash occurred in Indonesia in October 2018.

After the second crash, in Ethiopia in March 2019, the SEC said, β€œBoeing and Muilenburg have reassured the public that there are no slips or loopholes in the certification process regarding MCAS, despite their knowledge of the breaching information.”

Boeing resolved most of the claims from the two fatal accidents. Last year, it admitted responsibility for damages in lawsuits brought by the families of the 157 people killed in the 2019 Ethiopian Airlines 737 Max crash. A small number of trials are expected to begin in 2023 to help resolve the claims.

The Federal Aviation Administration required 737 MAX pilots to undergo new training to handle MCAS as well as impose important new safeguards and other software changes to the flight control system before allowing the aircraft to return to service.

These accidents cost Boeing more than $20 billion and led Congress to pass sweeping legislation to reform how the FAA approves new planes. Boeing faces a December deadline to win FAA approval for the 737 MAX 7 and 10, or it must meet recent cockpit alert requirements.

In January 2021, Boeing agreed to pay $2.5 billion in fines and damages to resolve a US Department of Justice criminal investigation into the 737 MAX crash.

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The Justice Department’s settlement, which allowed Boeing to avoid prosecution, included a $243.6 million fine, $1.77 billion in damages to the airlines, and a $500 million Crash Victims Fund for conspiracy to fraud charges related to the defective aircraft design.

The families of some of the people killed in the Boeing crash asked the judge to declare the government violated their legal rights when they reached the settlement.

In December 2019, Boeing fired Muilenburg after the company clashed with regulators over the timing of the 737 Max’s return to service. Muilenburg’s lawyer, who did not admit or deny any wrongdoing, did not immediately respond to a request for comment.

Muilenburg left Boeing with $62 million in compensation and pensions, but he did not receive severance payments.

The SEC said Boeing and Muilenburg are profiting by misleading investors about the safety of the 737 Max in an effort to rehabilitate Boeing’s image in the wake of two tragic accidents that killed 346 people and mourned countless families. Director Gurbir Grewal.

Last November, current and former Boeing executives reached a $237.5 million settlement with shareholders to settle a lawsuit over board oversight of the safety of the 737 MAX.

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