- The stock price of Boeing (BA) fell by over 2.3% pre-market today. This is why.
The stock price of Boeing (BA) fell by over 2.3% pre-market today.
Why: The Securities and Exchange Commission (SEC) charged Boeing and its former CEO, Dennis Muilenburg, with making materially misleading public statements following crashes of Boeing airplanes in 2018 and 2019. These crashes involved Boeing’s 737 MAX airplane and a flight control function called the Maneuvering Characteristics Augmentation System (MCAS).
After the first crash, Boeing and Muilenburg reportedly knew that MCAS posed an ongoing airplane safety issue, but assured the public that the 737 MAX airplane was “as safe as any that has ever flown the skies,” according to the SEC. And following the second crash, 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.
According to the SEC’s order, one month after Lion Air Flight 610, a 737 MAX airplane, crashed in Indonesia in October 2018, Boeing issued a press release, edited and approved by 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. And the press release also provided 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, according to the SEC’s orders.
“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. 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.”
— SEC Chair Gary Gensler