Boeing to pay $200 million to settle SEC investigation related to 737 MAX crashes

Securities regulator probed allegations the company made misleading statements to investors about crashes and jet program.

Boeing Co. will pay $200 million to settle a Securities and Exchange Commission investigation into allegedly misleading statements the company and then-Chief Executive Dennis Muilenburg made about the 737 MAX jets that crashed in Indonesia and Ethiopia, regulators said.

Mr. Muilenburg agreed to pay $1 million to settle the SEC’s claims, the agency announced on Thursday.

Boeing had no immediate comment. Mr. Muilenburg couldn’t immediately be reached for comment. The Wall Street Journal earlier reported Thursday that Boeing was poised to settle the matter with the SEC. could be announced as soon as this week, the people said.

Dennis Muilenburg

Dennis Muilenburg, president and CEO of the Boeing Company, testifies before the House Transportation and Infrastructure Committee October 30, 2019 on Capitol Hill in Washington, DC. The committee held a hearing on "The Boeing 737 MAX: Examining the (Alex Wong/Getty Images / Getty Images)

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Mr. Muilenburg led Boeing through the two crashes, which took 346 lives, and months of their aftermath. His predictions about when the 737 MAX would return to service frustrated the company’s airline customers and senior leaders at the Federal Aviation Administration, which had grounded the plane after the second crash, in Ethiopia, in March 2019. Boeing’s board forced out Mr. Muilenburg at the end of that year.

The SEC enforces laws that require public companies like Boeing to disclose material facts and other information that shareholders need to make investment decisions. The agency investigated how Boeing communicated with investors about the crashes and its response to the crisis, which wiped out billions of dollars of the company’s market value. The Justice Department conducted a separate criminal investigation that alleged a former Boeing pilot misled air-safety regulators about how the MAX’s flight-control system worked.

Boeing 737 Max 10 Iceland to Farnborough Airshow

Boeing’s largest single-aisle airplane, the 737 MAX, arrived in Iceland on its way to the Farnborough International Airshow. (Boeing)

Boeing paid $2.5 billion—most of that earmarked for airline customers and families of the crash victims—to settle the DOJ’s criminal probe. In March, a federal jury in Texas acquitted the former pilot of all criminal charges against him.

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After the first 737 MAX crashed in Indonesia in October 2018, Mr. Muilenburg touted the airplane’s safety as regulators around the world continued to allow airlines to carry passengers on the aircraft. "The 737 MAX is a very safe airplane and we’re very confident," Mr. Muilenburg told Fox Business Network on Nov. 13, 2018.

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Mr. Muilenburg’s assurances followed a Wall Street Journal article that revealed Boeing hadn’t informed pilots about a new flight-control system on the 737 MAX, which accident investigators had identified as playing a significant role in the crashes.

FILE PHOTO: Grounded Boeing 737 MAX aircraft are seen parked in an aerial photo at Boeing Field in Seattle, Washington, U.S. July 1, 2019. REUTERS/Lindsey Wasson/File Photo - RC2OQF9OA216

While Boeing’s engineers were working on a fix to the automated cockpit feature known as MCAS, the company was publicly pointing to apparent pilot and airline-maintenance missteps that investigators also flagged as factors leading to the accidents. Air-safety regulators in the U.S. and around the world allowed the 737 MAX to keep flying as safety bulletins reminded pilots of emergency procedures that could disable the flight-control system if it misfired. Regulators grounded the plane after the second crash in March 2019.

The DOJ’s criminal investigation led to charges against a former Boeing pilot, Mark Forkner, who was accused of misleading federal air-safety regulators about MCAS and whether the system’s details should be included in pilot manuals and training. Prosecutors alleged Mr. Forkner misled regulators to save Boeing hundreds of millions of dollars.

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After a trial in Fort Worth, Texas, that lasted less than a week, he was acquitted in March of all charges against him.

No Boeing executives faced criminal prosecution for their roles in the 737 MAX crashes or its certification. The company’s settlement agreement with the Justice Department said prosecutors didn’t find pervasive misconduct involving high-level company officials.