Boeing Co is to pay US$200 million to settle civil charges by the US Securities and Exchange Commission (SEC) that it misled investors about its 737 MAX, which was grounded for 20 months after two fatal crashes killed 346 people, the agency said on Thursday.
Boeing knew after the first crash that a flight control system posed a safety issue, but assured the public that the 737 MAX airplane was “as safe as any that has ever flown the skies,” the SEC said in announcing the settlement.
The SEC also said former Boeing CEO Muilenburg had agreed to pay US$1 million to settle charges.
Both Boeing and Muilenburg did not admit or deny the SEC’s findings, the agency said.
A fund is to be established for the benefit of harmed investors, it said.
“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 Chair Gary Gensler said in a statement.
Boeing and Muilenburg “failed in this most basic obligation,” he said.
The SEC charged Boeing and Muilenburg “with making materially misleading public statements following crashes of Boeing airplanes in 2018 and 2019.”
Boeing, which said it did not admit or deny wrongdoing in the settlement agreement, said it had made “fundamental changes that have strengthened our safety processes” and said the “settlement is part of the company’s broader effort to responsibly resolve outstanding legal matters related to the 737 MAX accidents.”
The crashes were linked to a flight control system called the Maneuvering Characteristics Augmentation System (MCAS).
The SEC said “after the first crash, Boeing and Muilenburg knew that MCAS posed an ongoing airplane safety issue, but nevertheless assured the public that the 737 MAX airplane was ‘as safe as any that has ever flown the skies.’”
The first crash, of a Lion Air flight in Indonesia, occurred in October 2018.
After the second crash, in Ethiopia in March 2019, “Boeing and Muilenburg assured the public that there were no slips or gaps in the certification process with respect to MCAS, despite being aware of contrary information,” the SEC said.
Boeing has resolved most claims from the two fatal crashes. Last year, it acknowledged liability for compensatory damages in lawsuits filed by families of the 157 people killed in the 2019 Ethiopian Airlines 737 MAX crash. A small number of trials are expected to begin next year to help resolve claims.
The US Federal Aviation Administration (FAA) required 737 MAX pilots to undergo new training to deal with MCAS, as well as mandating significant new safeguards and other software changes to the flight control system, before allowing the planes to return to service.
The crashes cost Boeing more than US$20 billion and led the US Congress to pass sweeping legislation reforming how the FAA certifies new airplanes. Boeing faces a December deadline to win approval from the FAA of the 737 MAX 7 and 10 variants, or it must meet new modern cockpit-alerting requirements.
In January last year, Boeing agreed to pay US$2.5 billion in fines and compensation to resolve a US Department of Justice criminal investigation into the 737 MAX crashes.
The justice department settlement, which allowed Boeing to avoid prosecution, included a fine of US$243.6 million, compensation to airlines of US$1.77 billion and a US$500 million crash-victim fund over fraud conspiracy charges related to the plane’s flawed design.
HORMUZ ISSUE: The US president said he expected crude prices to drop at the end of the war, which he called a ‘minor excursion’ that could continue ‘for a little while’ The United Arab Emirates (UAE) and Kuwait started reducing oil production, as the near-closure of the crucial Strait of Hormuz ripples through energy markets and affects global supply. Abu Dhabi National Oil Co (ADNOC) is “managing offshore production levels to address storage requirements,” the company said in a statement, without giving details. Kuwait Petroleum Corp said it was lowering production at its oil fields and refineries after “Iranian threats against safe passage of ships through the Strait of Hormuz.” The war in the Middle East has all but closed Hormuz, the narrow waterway linking the Persian Gulf to the open seas,
Apple Inc increased iPhone production in India by about 53 percent last year and now makes a quarter of its marquee devices there, reflecting the US company’s efforts to avoid tariffs on China. The company assembled about 55 million iPhones in India last year, up from 36 million a year earlier, people familiar with the matter said, asking not to be named because the numbers aren’t public. Apple makes about 220 million to 230 million iPhones a year globally, with India’s share of the total increasing rapidly. Apple has accelerated its expansion in the world’s most populous country in recent years, bolstered
HEADWINDS: The company said it expects its computer business, as well as consumer electronics and communications segments to see revenue declines due to seasonality Pegatron Corp (和碩) yesterday said it aims to grow its artificial intelligence (AI) server revenue more than 10-fold this year from last year, driven by orders from neocloud solutions clients and large cloud service providers. The electronics manufacturing service provider said AI server revenue growth would be driven primarily by the Nvidia Corp GB300 server platform. Server shipments are expected to increase each quarter this year, with the second half likely to outperform the first half, it said. The AI server market is expected to broaden this year as more inference applications emerge, which would drive demand for system-on-chip, application-specific integrated circuits
PROJECTION: TSMC said it expects strong growth this year, with revenue in US dollars projected to grow by about 30 percent, outperforming the industry Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday reported consolidated sales last month reached NT$317.66 billion (US$9.98 billion), the highest ever for the month of February, driven by robust demand for chips built using the company’s advanced 3-nanometer (3nm) process. Last month’s figure was up 22.2 percent from a year earlier, but fell 20.8 percent from January, the world’s largest contract chipmaker said in a statement. For the first two months of the year, TSMC posted cumulative sales of NT$718.91 billion, up 29.9 percent from a year earlier. Analysts attributed the growth to sustained global demand for artificial intelligence (AI) products
RSS