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Boeing Sued For Defrauding Shareholders After Fatal Crashes

Tyler Durden
April 10th, 2019
Zero Hedge
Comments (7) Read by 381 people

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This article was originally published by Tyler Durden at Zero Hedge

Boeing shareholders who lost money selling their stock after the Ethiopian Airlines crash are suing the company for concealing unflattering material information from the public, defrauding shareholders in the process, Reuters reports.

The class-action lawsuit, filed in Chicago, is seeking damages after the March 10 crash of Ethiopian Airlines flight ET302 wiped $34 billion off Boeing’s market cap within two weeks. But if true, the crux of the lawsuit might have broader repercussions for the company as it tries to convince regulators to lift a grounding order that has kept the Boeing 737 MAX 8 grounded since mid-March.

In essence, the suit alleges that the company concealed safety concerns about the 737 MAX and its anti-stall software following the Lion Air crash in October that killed 189 people, but did nothing to alert the public or correct the issue.

Boeing “effectively put profitability and growth ahead of airplane safety and honesty” by rushing the 737 MAX to market without “extra” or “optional” safety features – a practice that has outraged the company’s critics – as it feared ceding market share to Airbus SE. Moreover, Boeing failed to disclose a conflict of interest surrounding its ‘regulatory capture’ of the FAA, which was revealed to have outsourced much of the approval process for the 737 MAX to Boeing itself.

Lead plaintiff Richard Seeks bought 300 Boeing shares in early March and sold them at a loss after the shares dumped more than 12% in the weeks after the second crash, which would have left him with a loss between $15,000 and $20,000. The lawsuit seeks damages for Boeing investors who bought the company’s shares from Jan. 8 to March 21. Boeing CEO Dennis Muilenburg and CFO Gregory Smith have also been named as defendants.

Of course, this shareholder lawsuit is only the tip of the legal iceberg for Boeing. The company will likely face a blizzard of lawsuits filed by family members of those killed during the Lion Air and Ethiopian Airlines crashes, the first of which has already been filed.

Though its shares have recovered from their post-grounding lows, they have hit another bout of turbulence this week after the company announced that it would slash production of the 737 MAX by 20%, before announcing that its aircraft orders in Q1 fell to 95 from 180 a year earlier.

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Author: Tyler Durden
Views: Read by 381 people
Date: April 10th, 2019
Website: https://www.zerohedge.com/

Copyright Information: This content has been contributed to SHTFplan by a third-party or has been republished with permission from the author. Please contact the author directly for republishing information.

7 Comments...

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  1. Stuart says:

    All because third world pilots can’t hand fly an airplane.
    Lawyers – what scum.

    • DarrenR says:

      my understanding is that they pilos could not get control of the plane back from the computers. basically that it’s the computers which crashed the planes, not the pilots.
      either way, we’ll know more in the coming months.

  2. Bilge Pump McCoy says:

    This reminds me of the Ford Pinto case where the lawyers discovered a memo which compared the cost of fixing the gas tank with the expected cost of lawsuits for people that could be killed in rear-end crashes. Ford decided that paying a few million in compensation from exploding gas tanks was a lot cheaper than fixing all the gas tanks. That lawsuit (and related ones) didn’t turn out very good for Ford and Boeing is going to get the same punishment – only much worse.

  3. the blame-e says:

    Boeing, the FAA, and airline companies did this to themselves.

    First by treating the 737 and 737 MAX as one airplane no requirement for separate and expensive certification processes in two airframes.

    Second, the airline companies, mainly the foreign ones, were too cheap to make sure their pilots received the mandatory training in the MCAS flight system.

    This episode should be taught in every business school. It is the very flower of capitalism: greed and avarice running wild.

  4. Anonymous says:

    My grandfather trained his foreign replacements and brought hepatitis home to his wife and 6 children while working for your globalist company. There is no question, in my mind, how an adequate design would have been crashed by Africans.

  5. rellik says:

    I can’t reveal too much, but suffice it to say I know how Boeing used to certify aircraft. Prior to the merger with McDonald Douglas Boeing had the best, most expensive, and through certification system in the world. I left the company many years ago because of the Company values changes that occurred after that merger. Boeing still designs and makes the best, safest aircraft in the world, but today they have a different focus. In my day it was make the best aircraft in the world and it will sell better than anything else. Today it is make the most money, and placard the aircraft.

  6. Do the right thing and you’ll have fewer problems and more customers…..you make your money on the back end.

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