Boeing to pay $200 million on 737 Max crashes to settle SEC charges: NPR

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Justin Tallis/AFP via Getty Images

side view of a Boeing 737 Max airplane

Justin Tallis/AFP via Getty Images

Boeing has agreed to pay a $200 million fine to settle Securities and Exchange Commission charges that the company misled investors and the public about the safety of the 737 Max after two of the planes crashed in 2018 and 2019, killing 346 people.

The SEC has accused the Boeing Company and its former CEO, Dennis Muilenburg, of “making materially misleading public statements” following the crashes.

Investigators found that both crashes were caused in part by a faulty automated flight control system called MCAS. The SEC said that after the first crash in Indonesia in October 2018, Boeing and then-CEO Muilenburg “knew that MCAS was an ongoing aircraft safety issue, but nonetheless assured the public that the aircraft 737 Max was ‘as safe as anything that has ever been ‘flown in the sky’.”

Then the second plane crashed in Ethiopia in March 2019.

Six weeks after the second crash, at the company’s annual meeting of shareholders, the SEC said Muilenburg told investors, analysts and reporters that the company followed normal procedures when certifying the plane by the FAA, even though he knew the company had uncovered evidence that he misled the FAA about MCAS.

“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 in this most basic obligation.”

“Boeing and Muilenburg put profits before people by misleading investors about the safety of the 737 MAX in an effort to rehabilitate Boeing’s image following two tragic crashes that left 346 people dead and heartbreak incalculable for so many families,” added Gurbir S. Grewal, director of the SEC’s Enforcement Division.

In addition to Boeing’s $200 million fine, Muilenburg will pay $1 million, but neither he nor the company admits to wrongdoing.

Lawyers for some of the family members of those killed in the crashes call Muilenburg’s $1 million fine ‘insult’ and ‘reprehensible in light of the $62 million golden parachute he would have received when he was fired”.

Last year, Boeing agreed to pay $2.5 billion in fines and compensation to solve a criminal investigation into the design and certification of the 737 Max. The Justice Department has charged Boeing with fraud and conspiracy, alleging the plane’s manufacturer defrauded the FAA during certification of the 737 Max. But Boeing has reached a deferred prosecution agreement with the DOJ to settle the case. Some families of accident victims have gone to court to try to overturn this agreement.

Boeing said in a statement that Thursday’s settlement “fully resolves” the SEC’s investigation and “is part of the company’s broader efforts to responsibly resolve outstanding legal issues related to the 737 MAX crashes of a manner that best serves the interests of our shareholders, employees, and other stakeholders.”

Boeing’s statement adds that in response to the 737 Max crashes, it has “made broad and deep changes in our business” to improve safety and oversight.

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