Boeing Co. reached a $200 million settlement with the Securities and Exchange Commission on Thursday into allegations that the aircraft manufacturer and former chief executive deceived investors and the public about the safety of the 737 MAX plane that killed 346 people in two crashes.
Dennis Muilenburg, Boeing's former CEO, agreed to pay $1 million to settle with the SEC. According to the SEC, after the first 737 MAX crash, Muilenburg understood a flight control function called the Maneuvering Characteristics Augmentation System was an ongoing safety issue but assured the public that the airplane was airworthy.
Here's an overview of how the MCAS works:
After the second crash, Muilenburg and Boeing assured the public that there were gaps in the certification process concerning the MCAS flight control system, despite the SEC indicating there was "contrary information."
"In times of crisis and tragedy, it is especially important that public companies and executives provide full, fair and truthful disclosures to the markets," SEC Chairman Gary Gensler wrote in a statement. He said Muilenburg and Boeing "failed in this most basic obligation" to be "full, fair, and truthful in disclosures to the markets."
"They misled investors by providing assurances about the safety of the 737 MAX, despite knowing about serious safety concerns," Gensler continued.
The settlement revealed by the SEC on Thursday is based on the statements the former exec and aerospace manufacturer made to Wall Street.
In a separate criminal investigation, the Justice Department found a former Boeing pilot deceived air-safety regulators about how the MAX's MCAS operated. Boeing agreed to pay $2.5 billion in a legal settlement with DOJ -- some of it was earmarked for families who lost loved ones in the two MAX crashes.
"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," said Gurbir S. Grewal, Director of the SEC's Enforcement Division.
Last year, current and former company directors reached a $237.5 million settlement with shareholders over the board's lack of oversight of the MAX.
Meanwhile, Boeing shares are down 68% off the record high put in right before the second MAX crash in early March 2019.
Boeing's best-selling plane was grounded for 20 months and returned to the skies in November 2020.