In October of 2018, 189 people were killed when a Boeing (NYSE: BA) 737 Max crashed in Indonesia. Less than six months later, another 157 passengers were killed in another 737 Max crash, this time in Ethiopia. Internal documents later revealed that Boeing knew about the problems with the aircraft that caused the deadly incidents.
Now, Boeing has agreed to pay a $200 million penalty to the U.S. Securities and Exchange Commission (SEC) for misleading the public about the safety of the Boeing 737 Max.
Both Boeing and its former CEO, Dennis Muilenburg, were charged by the SEC for misleading investors about the 737 Max. Boeing says this settlement "fully resolves" the SEC's inquiry.
"The SEC remains committed to rooting out misconduct when public companies and their executives fail to fulfill their fundamental obligations to the investing public," SEC Chair Gary Gensler is quoted in the SEC's settlement announcement.
Boeing and Muilenburg "misled investors by providing assurances about the safety of the 737 MAX, despite knowing about serious safety concerns," Gensler said.
The 737 Max crashes were caused by a design flaw in the plane's Maneuvering Characteristics Augmentation System (MCAS). During the plane's certification process, Boeing allegedly misled the Federal Aviation Administration (FAA) about the safety of the 737 Max and the MCAS.
According to the SEC, Boeing quickly responded to the first crash by implying that the incident was caused by pilot error, despite knowing the fact that the MCAS likely caused the crash. Even after the second crash, Muilenburg assured reporters that the 737 Max was safe and properly certified.
"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 that resulted in the loss of 346 lives and incalculable grief to so many families," SEC's director of Enforcement, Gurbir S Grewal, is quoted in the release.
There have been several rounds of internal documents released by Boeing, and each has revealed that Boeing employees were aware of the safety issues with the 737 Max but were ignored by their superiors.
"I still haven't been forgiven by God for the cover up I did last year," wrote one Boeing employee.
"Would you put your family on a Max simulator trained aircraft? I wouldn't," one employee messaged to another.
Last year, the aviation company settled criminal charges of fraud and conspiracy regarding the Boeing 737 Max's FAA certification process. The Department of Justice (DOJ) agreed to forgo pursuing the charges in exchange for $2.5 billion in fines and compensation.
The DOJ's so-called deferred prosecution agreement means that Boeing can't face further criminal charges regarding its alleged efforts to defraud the FAA. Families of the 346 people killed in the crashes are fighting to have that agreement tossed out.