FinanceDraft

Boeing Sued by Shareholders Over Non-Disclosures

Boeing is in trouble again, only this time it is legal. Shareholders have filed a lawsuit for not revealing that there were deficiencies in its Max 737 planes which led to two fatal accidents killing all on-board. The lawsuit filed in a federal court in Chicago has named the CFO Gregory Smith and CEO Dennis Muilenburg as defendants and is seeking damages for security fraud violations.

Lawsuit on Boeing
The case is identified as Seeks v Boeing Co, etc. US District Court, Northern District of Illinois No 19-02394. The lead plaintiff, in this case, is Richard Seeks who have petitioned that the compromises made on the plane’s security came into light after the Ethiopian airlines crash and said that the airline manufacturer ‘effectively put profitability and growth ahead of airplane safety and honesty.’ Seeks who bought 300 shares of Boeing in March had to sell them in a couple of weeks at a loss and is asking for damages for Boeing investors from Jan 8 to Mar 21. He said that Boing rushed to release the 737 Max so as to be best the Airbus SE due to which they left out optional or extra features in the design which could have prevented the two crashes. The market value of its shares fell by $ 34 billion after the Mar 10 Ethiopian Airlines crash of Boeing 737 Max.

Apart from this lawsuit, there are many more that the company is facing which includes cases filed by families of crash victims and employee retirement plans participants. Boeing has declined to comment on the latest lawsuit filed, and the complaint mentions that there was a conflict of interest and the plane’s safety was not assessed properly by the federal regulators. Meanwhile, Boeing made tall statements about 737 Max and its great growth prospects to the shareholders without stating its security flaws.

In response to the crashes of Ethiopian Airlines and Lion Air, many countries have grounded their fleet of Boeing 737, Max. The company also said that the orders for the 737 Max fell from 180 to 95 in the first quarter, and after many countries started grounding the aircraft, there are no orders. The company also announced in the first week of April that it was limiting production from 52 to 42 planes. Meanwhile, Boeing is working on fixing the software to fix its sensor to prevent further mishaps.

Leave a Reply