American aircraft manufacturer Boeing will pay $200 million to settle charges for misleading investors about its 737 MAX airplane, the US Securities and Exchange Commission (SEC) said Thursday.
The SEC said it charged the company and its former CEO Dennis A. Muilenburg with “making materially misleading public statements following crashes of Boeing airplanes in 2018 and 2019.”
It said Boeing and Muilenburg knew that there was an ongoing airplane safety issue after the first crash, but they nevertheless assured the public that the 737 MAX airplane was “as safe as any that has ever flown the skies.”
Following the second crash, Boeing and Muilenburg continued to assure the public, despite being aware of contrary information, it added.
“There are no words to describe the tragic loss of life brought about by these two airplane crashes,” SEC Chair Gary Gensler said in a statement. “In times of crisis and tragedy, it is especially important that public companies and executives provide full, fair, and truthful disclosures to the markets.”
Lion Air Flight 610, a 737 MAX airplane, crashed in Indonesia in October 2018, while another 737 MAX, Ethiopian Airlines Flight 302, crashed in March 2019 shortly after takeoff.
After grounding flights for 20 months following the two fatal crashes, the US Federal Aviation Administration (FAA) cleared Boeing’s 737 MAX in November 2020.
While the FAA ordered Boeing to approve 737 MAX pilot training program revisions for each US airline operating the aircraft, it said it will continue to work closely with foreign civil aviation administrations to further evaluate the 737 MAX.
The SEC said its orders against Boeing and Muilenburg find that they “negligently violated the antifraud provisions of federal securities laws,” adding: “Without admitting or denying the SEC’s findings, Boeing and Muilenburg consented to cease-and-desist orders that include penalties of $200 million and $1 million, respectively.”
Gurbir S. Grewal, director of the SEC’s Enforcement Division, said public companies and their executives must provide accurate and complete information when they make disclosures to investors, no matter the circumstances, adding: “When they don’t, we will hold them accountable, as we did here.”