CHICAGO (Legal Newsline) – A Boeing investor has filed a securities class action against the company following two deadly airplane crashes in Ethiopia and Indonesia.
Richard Seeks, who filed the suit in the U.S. District Court for the Northern District of Illinois, sued the company along with Chief Executive Officer Dennis Muilenburg and Chief Financial Officer Greg Smith on April 9.
He filed on behalf of all investors who bought securities between early January and late March, alleging the company and the executives put "profitability and growth ahead of airplane safety and honesty," the suit states.
The defendants are further alleged to have misled investors over growth and profitability, and "maintaining that the Boeing 737 Max was the safest airplane to fly the skies," the suit states.
A Boeing 737 Max operated by Lion Air crashed in Indonesia last year, killing all on board. In March, another 737 Max operated by Ethiopian Airlines also crashed, again with no survivors.
When asked for a response to the lawsuit, Boeing spokesman Peter Pedraza told Legal Newsline: "We wouldn’t comment on this."
He directed Legal Newsline to an update page on the 737 Max within the Boeing website and comments by CEO Muilenburg.
In his most-recent statement, issued April 4, Muilenburg said, "We at Boeing are sorry for the lives lost in the recent 737 Max accidents. These tragedies continue to weigh heavily on our hearts and minds, and we extend our sympathies to the loved ones of the passengers and crew on board Lion Air Flight 610 and Ethiopian Airlines Flight 302."
In his suit, Seeks claims that Boeing concealed the "full extent" of safety issues that allegedly arose from the introduction of larger engines on the 737 Max craft. These larger engines changed the "handling characteristics," the suit states.
"These handling characteristics included the danger of the increased pitchup tendency of the aircraft, that required special safety features, some of which Boeing installed only as 'extras' or 'optional features,'" Seeks alleges in the suit.
The complaint continues, "Boeing (hid) from investors and passengers that it prepared its own reports and statements to the (Federal Aviation Administration) certifying its planes as safe to fly."
The suit zeroes in on the introduction of a new control system known as Maneuvering Characteristics Augmentation System (MCAS), which was included on the 737 but allegedly not in flight manuals.
In his early April statement, Muilenberg stated, "The full details of what happened in the two accidents will be issued by the government authorities in the final reports, but, with the release of the preliminary report of the Ethiopian Airlines Flight 302 accident investigation, it’s apparent that in both flights the Maneuvering Characteristics Augmentation System, known as MCAS, activated in response to erroneous angle of attack information."