Boeing to settle SEC allegations of misleading investors • The Register

Boeing has agreed to pay $ 200 million to settle allegations by the Securities and Exchange Commission (SEC) that the aviation giant deceived investors about the safety of its 737 MAX aircraft.

The 737 MAX was involved in two accidents that killed everyone on board in 2018 and 2019, now considered at least in part to be caused by glitches in the aircraft’s Maneuvering Features Augmentation System (MCAS) software. Boeing admitted that MCAS played a role in both incidents.

The MCAS was to intervene automatically and help prevent the 737 Max from stalling in a particular flight scenario where the aircraft’s angle of attack (AoA) becomes too high. He did this by adjusting the attitude of the airliner, pushing the nose of the plane down in bursts of 10 seconds.

If the MCAS receives erroneous data from the aircraft’s AoA probe, it may mistakenly decide that the aircraft is in danger of stalling and start turning nose down. It turned out that the pilots were unaware of what MCAS was, how it worked, or how to safely disable it.

The airliner returned to service in 2021, but not before software updates and substantial investigations and fines on Boeing’s handling of the affair.

The $ 200 million to the SEC, little more than an administrative expense compared to the more than $ 2.5 billion that Boeing has already had to pay in penalties and compensation, reflects the company’s statements regarding the safety of the 737 MAX after the crashes. deadly.

The SEC claims that, a month after the first crash of Lion Air Flight 610 off the coast of Indonesia in October 2018, Boeing issued a press release, approved by former CEO Dennis A Muilenburg, which “selectively highlighted some made by an official report from the Indonesian government suggesting pilot error and poor maintenance of the aircraft contributed to the crash. had determined that MCAS posed an ongoing “airplane safety problem” and that Boeing had already begun redesigning MCAS to address that problem. “

In other words, Boeing and Muilenburg knew that MCAS was an ongoing safety concern, but they assured the public that the 737 MAX aircraft was “as safe as any airplane that has ever flown the skies.”

About six weeks after the crash of Ethiopian Airlines Flight 302 in March 2019 and the grounding of the entire 737 MAX fleet, the SEC said Muilenburg, “although aware of information that questions some aspects of the certification process related to MCAS, told analysts and reporters that ‘there was no surprise or empty space … which somehow slipped through. [the] certification process “for the 737 MAX and that Boeing had” gone back and confirmed again … that we have followed exactly the steps in our design and certification processes that consistently produce safe airplanes. “

The SEC found that Boeing and Muilenburg “negligently violated the anti-fraud provisions of the federal securities laws.” The company and the former CEO have agreed to termination and termination orders that include penalties of $ 200 million and $ 1 million, respectively, without admitting or denying the SEC’s findings. The money will go to the repayment of the investors.

SEC President Gary Gensler said, “There are no words to describe the tragic loss of life caused by these two plane crashes. In times of crisis and tragedy, it is especially important that public companies and executives provide complete, correct information. and truthful to the markets.

“The Boeing Company and its former CEO, Dennis Muilenburg, failed to fulfill this fundamental obligation. They misled investors by providing assurances about the safety of the 737 MAX, despite being aware of serious safety concerns. The SEC remains committed to eradicating the 737 MAX. misconduct when public companies and their executives fail to fulfill their fundamental obligations towards the public investor. “

Gurbir Grewal, director of the SEC’s Enforcement Division, added, “Boeing and Muilenburg have run over people by misleading investors about the safety of the 737 MAX, in an attempt to restore Boeing’s image following two tragic accidents that resulted in the loss. of 346 lives and incalculable pain to so many families.

“But public companies and their executives must provide accurate and complete information when making disclosures to investors, regardless of the circumstances. Otherwise, we will hold them accountable, as we have done here.”

A Boeing spokesman said so The register: “We will never forget the people lost on Lion Air Flight 610 and Ethiopian Airlines Flight 302, and we have made broad and profound changes throughout our company in response to those incidents – fundamental changes that have strengthened our security and oversight processes. of safety issues, and we have strengthened our culture of safety, quality and transparency.

“The agreement announced today completely resolves the SEC previously disclosed investigation into matters relating to the 737 MAX accidents. The agreement specifies that Boeing does not admit or deny the findings in the SEC statement of facts, which pertain to the company’s statements. made in late 2018 and early 2019

“Today’s agreement is part of the company’s broader effort to responsibly resolve outstanding legal issues relating to 737 MAX accidents in a way that serves the best interests of our shareholders, employees and other interested parties.” ®