SEC opens probe into Boeing’s disclosures about 737 Max
The US Securities and Exchange Commission has opened an investigation into Boeing’s disclosures to investors about the 737 Max airliner, according to a person familiar with the matter.
The investigation by the US securities regulator adds to the regulatory pressure on the jet maker following two crashes that killed 346 people in total. Aviation authorities worldwide grounded the 737 Max in March.
The probe, first reported by Bloomberg, is separate to a criminal investigation by US federal authorities into the initial certification of the jet as safe to fly. The SEC’s inquiry is in its early stages and may not lead to any allegations of wrongdoing.
A SEC spokesman declined to comment, as did Boeing.
The manufacturer has been under scrutiny over what it knew about software problems with the 737 Max, which was an important sales driver for the company before the deadly crashes in Indonesia and Ethiopia.
In early May, the company admitted an important safety feature on the plane did not work as intended and said it knew of the problem as early as 2017. An error warning light in the cockpit that was meant to be standard had not been in operation across all of the 737 Max fleet, Boeing said.
The issue was not communicated to airlines or to the US’s Federal Aviation Administration, Boeing’s regulator, until after the Indonesian crash in October 2018, the company said in a statement on May 5.
Public companies are required to tell investors about issues that are material to the business, a standard that allows executives and their legal advisers some leeway in determining whether disclosure is required.
The 737 Max has not flown commercially since March, when regulators across the world grounded the plane after the Ethiopian crash. The disasters have been linked to a piece of software that automatically pushes the nose of the 737 Max down in certain conditions.
There is no current timetable for its return to service. The FAA is awaiting formal submission of a software fix from Boeing. US lawmakers and European regulators have criticised the FAA’s safety certification process.
The SEC has civil authority and has often run investigations in parallel with the US Department of Justice, which can bring criminal cases.
Some US airlines and pilots unions that operate the Max said earlier this month they had received federal grand jury subpoenas for documents relating to the 737 Max in connection to the justice department’s investigation into the development of the plane and its certification as safe.