Dennis Muilenburg, the former CEO of Boeing, and the company agreed to pay significant fines to resolve charges from the Securities and Exchange Commission.
After two fatal crashes in 2018 and 2019, the SEC claimed that the company had misled the public regarding the safety of the 737 Max.
The SEC asserts that Boeing and Muilenburg falsely assured the public that the 737 Max was safe to fly while knowing that a portion of the aircraft's flight control system posed a continuing safety risk after a Lion Air 737 Max disaster in October 2018 that resulted in the deaths of 189 people.
Following a fatal 737 Max crash on March 10, 2019, the SEC alleges that Boeing and Muilenburg willfully deceived the public about "slips" and "gaps" in the flight control system's certification process.
Boeing said in a statement that the agreement "fully resolves the SEC's previously disclosed inquiry into matters relating to the 737 MAX accidents."
"Today's settlement is part of the company's broader effort to responsibly resolve outstanding legal matters related to the 737 MAX accidents in a manner that serves the best interests of our shareholders, employees, and other stakeholders," Boeing said.
Although they did not acknowledge or reject the SEC's accusations, the corporation and Muilenburg agreed to resolve claims that they had violated anti-fraud rules governing U.S. securities. Muilenburg agreed to pay $1 million, and Boeing agreed to pay a settlement of $200 million.
"In times of crisis and tragedy, it is especially important that public companies and executives provide full, fair, and truthful disclosures to the markets," said SEC Chair Gary Gensler in a statement. "The Boeing Company and its former CEO, Dennis Muilenburg, failed in this most basic obligation. They misled investors by providing assurances about the safety of the 737 MAX, despite knowing about serious safety concerns."
The SEC claims that Boeing and Muilenburg prioritized profits over people by misleading investors about the 737 Max's safety, all "in an effort to rehabilitate Boeing's image following two tragic accidents that resulted in the loss of 346 lives and incalculable grief to so many families," according to Gurbir Grewal, director of the SEC's Enforcement Division.
The fines, while hefty, are small in comparison to the financial toll the 737 Max has placed on Boeing over the years. Boeing's reported losses have topped tens of billions of dollars, not including the company's ongoing litigation liabilities.
Boeing (BA) shares plummeted more than 3% on Thursday, but recovered modestly in after-hours trading following the SEC announcement.
