A new lawsuit filed against the United States airplane maker Boeing has accused the plane maker of defrauding shareholders because the company has not made public the deficiencies in its 737 MAX planes before two of the planes crashed in two separate fatal accidents five months apart which led to the grounding of the 737 MAX globally which has now added on to the troubles of the company.
The shareholders who have proposed the class action which has been filed in Chicago federal court are demanding compensation against damages faced by them for alleged securities fraud violations following the tumbling of the share price of the company by more than $34 billion in a period of just two weeks after the crash of the 737 MAX place of the Ethiopian Airlines on the March 10.
The case also named as defendants the company’s Chief Executive Dennis Muilenburg and its Chief Financial Officer Gregory Smith. There were no comments made on the case by Boeing.
According to the case filed by the shareholders, the company “effectively put profitability and growth ahead of airplane safety and honesty” because it had hurriedly gone ahead of putting the 737 MAX in the market for sale and use in order to compete with its European rival Airbus SE, but in doing so it had left out “extra” or “optional” features which were designed to prevent crashes as happened with the Ethiopian Airlines and Lion Air.
The alleged conflict of interest shown by the company in retaining its broad authority from federal regulators to assess and examine the safety of the model had essentially undermined the statements made by the company about its growth prospects as well as the 737 MAX, the law suit also said.
After the fatal crash of the Ethiopian Airlines which killed all 157 onboard – just five months after another 737MAX of Lion Air crashed into the sea killing 189 passengers and crew, the compromises made by Boeing started to emerge out, said Richard Seeks, the lead plaintiff.
In early March, Seek had bought 300 Boeing shares, he said and added that he had ot sell them at a loss within the last two weeks. Damages for Boeing stock investors from Jan. 8 to March 21 are sought by the lawsuit.
Companies often have to face lawsuits filed by shareholders accusing the companies of conducting securities fraud by concealment of material negative information which results in a drop in the share price when such facts come out in the open. There are a number of other court cases being faced by the Chicago-based Boeing which also includes a lawsuit filed the family of victims of the crashes and by participants in its employee retirement plans.
The aircraft orders in the first quarter fell to 95 from 180 a year earlier, Boeing said in a statement on Tuesday and there has been no fresh order for its 737 Max following the worldwide grounding of the planes.
(Source:www.nbcnews.com)
The shareholders who have proposed the class action which has been filed in Chicago federal court are demanding compensation against damages faced by them for alleged securities fraud violations following the tumbling of the share price of the company by more than $34 billion in a period of just two weeks after the crash of the 737 MAX place of the Ethiopian Airlines on the March 10.
The case also named as defendants the company’s Chief Executive Dennis Muilenburg and its Chief Financial Officer Gregory Smith. There were no comments made on the case by Boeing.
According to the case filed by the shareholders, the company “effectively put profitability and growth ahead of airplane safety and honesty” because it had hurriedly gone ahead of putting the 737 MAX in the market for sale and use in order to compete with its European rival Airbus SE, but in doing so it had left out “extra” or “optional” features which were designed to prevent crashes as happened with the Ethiopian Airlines and Lion Air.
The alleged conflict of interest shown by the company in retaining its broad authority from federal regulators to assess and examine the safety of the model had essentially undermined the statements made by the company about its growth prospects as well as the 737 MAX, the law suit also said.
After the fatal crash of the Ethiopian Airlines which killed all 157 onboard – just five months after another 737MAX of Lion Air crashed into the sea killing 189 passengers and crew, the compromises made by Boeing started to emerge out, said Richard Seeks, the lead plaintiff.
In early March, Seek had bought 300 Boeing shares, he said and added that he had ot sell them at a loss within the last two weeks. Damages for Boeing stock investors from Jan. 8 to March 21 are sought by the lawsuit.
Companies often have to face lawsuits filed by shareholders accusing the companies of conducting securities fraud by concealment of material negative information which results in a drop in the share price when such facts come out in the open. There are a number of other court cases being faced by the Chicago-based Boeing which also includes a lawsuit filed the family of victims of the crashes and by participants in its employee retirement plans.
The aircraft orders in the first quarter fell to 95 from 180 a year earlier, Boeing said in a statement on Tuesday and there has been no fresh order for its 737 Max following the worldwide grounding of the planes.
(Source:www.nbcnews.com)
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