The U.S. Securities and Exchange Commission issued a press release on Thursday detailing a settlement that had been reached with The Boeing Company and its former CEO, Dennis A. Muilenburg. The $200 million settlement will settle allegations that the defendants made materially misleading statements to the public in the wake of crashes in both 2018 and 2019.
The 2018 and 2019 crashes each occurred on Boeing’s 737 MAX airplane and involved a flight control function known as the Maneuvering Characteristics Augmentation System, or MCAS. The SEC contended that following the 2018 crash, the defendants were aware that the MCAS on the 737 MAX airplane was a safety issue. Despite this knowledge, Boeing represented to the public that the 737 MAX airplane was as “safe as any airplane that has ever flown the skies.”
Following the 2019 crash, Boeing once again “assured the public that there were no slips or gaps in the certification process with respect to MCAS, despite being aware of contrary information.” The SEC’s complaint highlighted that Boeing also selectively emphasized facts regarding each crash in a manner that suggested pilot error and poor aircraft maintenance while also assuring the public of the aircraft’s safety.
SEC Chair Gary Gensler said of the settlement, “In times of crisis and tragedy, it is especially important that public companies and executives provide full, fair, and truthful disclosures to the markets… They [Boeing] mislead investors by providing assurances about the safety of the 737 MAX, despite knowing about serious safety concerns.”
“Boeing and Muilenburg put profits over people by misleading investors about the safety of the 737 MAX all in an effort to rehabilitate Boeing’s image following two tragic accidents… but public companies and their executives must provide accurate and complete information when they make disclosures to investors, no matter the circumstances. When they don’t, we will hold them accountable, as we did here,” stated Director of the SEC’s Enforcement Division, Gurbir S. Grewal.
The SEC found that both Boeing and Muilenburg “negligently violated the antifraud provisions of federal securities laws.” The defendants consented to a $200 million settlement without denying or affirming the SEC’s findings.
