Boeing to pay SEC $200m to settle charges it misled investors over 737 MAX safety
- Reference: 1663950367
- News link: https://www.theregister.co.uk/2022/09/23/boeing_sec_200m/
- Source link:
The 737 MAX was involved in two crashes that killed all aboard in 2018 and 2019, now understood to be at least partly caused by flaws in the aircraft's Maneuvering Characteristics Augmentation System (MCAS) software. Boeing admitted MCAS played a role in both accidents.
MCAS was intended to automatically kick in and help prevent the 737 Max from stalling in a particular flight scenario where the aircraft's angle of attack (AoA) becomes too high. It did so through adjusting the airliner's trim, pushing the aircraft's nose down in 10-second bursts.
[1]
If MCAS is fed erroneous data from the aircraft's AoA probe, it may wrongly decide the aircraft is at risk of stalling and start winding on nose-down trim. It emerged that pilots were not made aware of what MCAS was, how it worked or how to safely disable it.
[2]
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The airliner [4]returned to service in 2021 , but not before software updates and substantial investigations and fines over Boeing's handling of the affair.
The $200 million to the SEC, little more than an administrative expense compared to the [5]$2.5 billion-plus Boeing has already had to pay in penalties and compensation, reflects statements made by the company regarding the 737 MAX's safety following the fatal crashes.
[6]
The [7]SEC holds 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, that "selectively highlighted certain facts from an official report of the Indonesian government suggesting that pilot error and poor aircraft maintenance contributed to the crash. The press release also gave assurances of the airplane's safety, failing to disclose that an internal safety review had determined that MCAS posed an ongoing 'airplane safety issue' and that Boeing had already begun redesigning MCAS to address that issue."
In other words, Boeing and Muilenburg knew that MCAS posed an ongoing safety issue, but assured the public that the 737 MAX airplane was "as safe as any airplane that has ever flown the skies."
[8]After deadly 737 Max crashes, damning whistleblower report reveals sidelined engineers, scarcity of expertise, more
[9]Boeing 737 Max chief technical pilot charged with deceiving US aviation regulators over MCAS
[10]Boeing fined $17m after fitting uncertified sensors to 737 Max and NG airliners for 4 years
[11]Boeing will cough up $2.5bn+ to settle US fraud charge over 737 Max safety
Some six weeks after the March 2019 crash of Ethiopian Airlines Flight 302 and the grounding of the entire 737 MAX fleet, the SEC said Muilenburg, "though aware of information calling into question certain aspects of the certification process relating to MCAS, told analysts and reporters that 'there was no surprise or gap ... that somehow slipped through [the] certification process' for the 737 MAX and that Boeing had 'gone back and confirmed again ... that we 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 antifraud provisions of federal securities laws." The company and ex-CEO have consented to cease-and-desist orders that include penalties of $200 million and $1 million, respectively, without admitting or denying the SEC's findings. The money will go toward reimbursing investors.
SEC chair Gary Gensler said: "There are no words to describe the tragic loss of life brought about by these two airplane crashes. In times of crisis and tragedy, it is especially important that public companies and executives provide full, fair, and truthful disclosures to the markets.
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"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 remains committed to rooting out misconduct when public companies and their executives fail to fulfill their fundamental obligations to the investing public."
Gurbir Grewal, director of the SEC's Enforcement Division, added: "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.
"But public companies and their executives must provide accurate and complete information when they make disclosures to investors, no matter the circumstances. When they don't, we will hold them accountable, as we did here."
A spokesperson for Boeing told The Register : "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 in response to those accidents – fundamental changes that have strengthened our safety processes and oversight of safety issues, and have enhanced our culture of safety, quality, and transparency.
"The settlement announced today fully resolves the SEC's previously disclosed inquiry into matters relating to the 737 MAX accidents. The settlement specifies that Boeing does not admit or deny the findings in the SEC's statement of facts, which concern company statements made in late 2018 and early 2019.
"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." ®
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[4] https://www.theregister.com/2020/11/25/easa_737_max_return/
[5] https://www.theregister.com/2021/01/08/boeing_737_charges/
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[7] https://www.sec.gov/news/press-release/2022-170
[8] https://www.theregister.com/2021/12/15/boeing_737_max_senate_report/
[9] https://www.theregister.com/2021/10/15/boeing_737_max_tech_pilot_charged_mcas/
[10] https://www.theregister.com/2021/05/27/boeing_fined_737_max_uncertified_hugs_sensors/
[11] https://www.theregister.com/2021/01/08/boeing_737_charges/
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[13] https://whitepapers.theregister.com/
Re: "Reimbursing investors"
Such charges are not the responsibility of the SEC. How many people died in Tupolevs and Ilyushins, I wonder? Free market capitalism is the worst possible system, except for all the others.
Re: "Reimbursing investors"
@Chris Miller
cheating should not be allowed what ever the system is called.
Outrageous
It actually makes me so angry that a company like Boeing, who through negligence and incompetence caused the deaths of hundreds, can throw a few hundred million at the SEC from behind the sofa to make it all go away. It's utterly outrageous, and they should be held accountable. We live in a world where human lives now mean almost nothing and money means everything. I'd like to get off this hamster wheel please.
Re: Outrageous
The article (and the fine) are about misleading investors, not corporate manslaughter. It certainly hasn't "all gone away".
Re: Outrageous
Indeed. The final quote at the end of the article could perhaps do with clarifying: "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 including our money-grabbing, scumbag CEO and Board who couldn't give a flying f@&# about people's lives if it put their share options at risk " FTFY
Infesters
Investors are a bit like gamblers
When the times are good, they’re popping champagne bottles
When times are bad they’re pissing vinegar
Re: Infesters
Oh for fucks sake. Pissing vinegar? I've just gone crosslegged...
Normal misleading
I don't think that Boeing deliberately mislead anyone, this entire mess just looked like a typical error these days. The designers screwed up, busy trying to make the design update that the corporate management told them was a required big improvement and the workers doing the verification were probably told what the results were supposed to be by the managers ...
"You say that doesn't work, you've screwed up the verification! Do it again you snivelling, miserable coward, to show it works!"
Re: Normal misleading
Boeing got caught with emails from their test pilot saying "we managed totally pull the wool over the eyes of the FAA - aren't we awesome !"
Hopefully they have learned their lesson = never brag about breaking the law on a corporate email system
Re: Normal misleading
Sadly it will be the only lesson learned...
So next time they design a system that is not fit to put into a plane in order to save investor's money, and more people die, there won't be any proof...
Boeing takes it in the shorts
Not debating Boeing screwed up. But there is more to the 737 Max MCAS problem than the manufacturer.
Airlines wanted to get the Max in service with a minimum amount of expensive pilot training. They wanted to take a NextGen pilot, give them limited training (ie: no simulator time), and go flying. The airlines are Boeing's customers, so they cannot come out and say 'This is what the customer wanted' . There are only so many airlines to go around, and pissing them off negatively impacts future sales.
So Boeing has to take the public hit and accept responsibility, protecting their customers.
Re: Boeing takes it in the shorts
They can say "that will kill people, we won't do it".
They can say "we knew that what the customer wanted would kill people, but we took their money anyway".
But they didn't.
Re: Boeing takes it in the shorts
They didn't say it, but did it anyway
Re: Boeing takes it in the shorts
You're being too generous. In their panic to compete with the A320neo, instead of creating a decent design Boeing forced through an inferior design and fixed its problems with a software bodge that they told no one about. They have only themselves to blame for falling behind the curve in the airplane market and then creating a kludge that cost people's lives.
Re: Boeing takes it in the shorts
Boeing was building other, more fuel efficient aircraft. However, airlines didn't want them because they weren't labeled "737". There are costly training requirements that airlines can avoid by staying on the same major model of aircraft.
American Airline basically blackmailed Boeing into creating the 737MAX, placing an order for a non-existent higher efficiency 737 that Boeing had not planned or started developing. Honestly, there's nothing wrong with Boeing relenting and building the 737MAX. They simply tried to cut corners (MCAS using just a single AoA sensor), maximize profits (charging extra to include an indicator that shows when AoA sensors disagree), and going to great lengths to claim there was zero pilot training needed on 737MAX's new systems (like how to disable the MCAS). If Boeing hadn't been quite as greedy, the 737MAX would have been a perfectly fine, safe aircraft.
Re: Boeing takes it in the shorts
I thought it was only in IT that salespeople were able to sell something that didn't exit and then go to the engineers and say "you have to deliver this to the customer in 6 month"?
Re: Boeing takes it in the shorts
Poor hapless Boeing were pressured by the evil airlines into criminal actions they had no choice but to make? What insane garbage! Boeing coldly and deliberately cheated, lied and concealed in order to upstage Airbus and offer a shot that looked better but broke the law. That is US Department of Justice official, so we can say it here. It is an act of criminality unique in the annals of aviation, and 110% the fault of the criminal.
Ethics
In one day we have people upset that scientists are torturing cockroaches, and another page of people defending Boeing's murder of over 300 people.
Re: Ethics
I spoke up for the cockroaches, and I'm speaking up for Boeing's victims also.
Re: Ethics
So you are speaking up for the stockholders?
(the others were bloody foreigners, so of no concern to the USA)
"Reimbursing investors"
But no criminal conspiracy, or malfeasance / liability, charges.
As usual.
"Free market capitalism is self-regulating, and will punish malfeasance." Tell that to the hundreds dead.