Boeing will pay out US $200 million over charges of misleading investors related to the 737 Max. The Securities and Exchange Commission (SEC) said Boeing and its ex-CEO Dennis Muilenburg made false and misleading statements about 737 Max safety issues. The SEC said Boeing ‘put profits over people’.
After two deadly crashes, that killed 346 people, all 737 Max planes were grounded for nearly two years.
Muilenburg will pay a penalty of US $1 million. SEC chairman 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.”
Muilenburg, he said, “failed in this most basic obligation.”
“We will never forget those lost on Lion Air Flight 610 and Ethiopian Airlines Flight 302, and we have made broad and deep changes across our company,” Boeing said in response.
“Fundamental changes have strengthened our safety processes and culture of safety, quality, and transparency,” Boeing added.
The SEC said a fund will be set for investors who suffered losses.
An earlier settlement which allowed Boeing to avoid prosecution, includes a fine of US $243.6 million, compensation to airlines of $1.77 billion and a $500 million crash-victim fund over fraud conspiracy charges related to the plane’s flawed design. The deferred prosecution agreement is a form of corporate plea bargain.
In December last year families of victims of the two 737 MAX crashes said the US Justice Department violated their rights when it struck the deferred prosecution agreement with Boeing in January.
Relatives filed a motion arguing the United States Government “lied and violated their rights through a secret process.” They asked a US judge to declare that the order violated victims’ families rights to rescind Boeing’s immunity from criminal prosecution that was part of a $2.5 billion agreement.
In February 2022, the US Department of Justice opposed the bid by the families and asked a federal court in Texas to deny the families’ request for a hearing.