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mxaxai
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Boeing shareholders file lawsuit over 737MAX

Wed Sep 08, 2021 8:23 am

A Delaware court has accepted a lawsuit from Boeing shareholders against Boeing, or rather its leadership, accusing them of lying and failing to enact adequate safety monitoring.
In a lengthy summary of the shareholder's case, Zurn said the board "publicly lied about if and how it monitored the 737 MAX's safety."
...
It cited Calhoun's comments that "the board had been 'notified immediately, as a board broadly,' after the Lion Air crash and met 'very, very quickly' thereafter."
It added that after the second crash of an Ethiopian Airlines 737 MAX in March 2019, Calhoun represented that the board met within 24 hours of the crash to discuss potentially grounding the 737 MAX.
"Each of Calhoun's representations was false," Zurn's ruling said.

https://www.bloomberg.com/news/articles ... ax-crashes
 
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MrHMSH
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Re: Boeing shareholders file lawsuit over 737MAX

Wed Sep 08, 2021 9:15 am

Could the good news surrounding Boeing please make itself known...
 
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747classic
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Re: Boeing shareholders file lawsuit over 737MAX

Wed Sep 08, 2021 9:24 am

Shareholders were not complaining when the financial profits were exceptional high in the past, despite the fact that the actual profits were much lower.
As a shareholder, you also share the burden in bad times.
 
Caryjack
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Re: Boeing shareholders file lawsuit over 737MAX

Wed Sep 08, 2021 10:08 am

Good for you. I sold BA and bought VUG , and others
.
 
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LAX772LR
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Re: Boeing shareholders file lawsuit over 737MAX

Wed Sep 08, 2021 10:24 am

747classic wrote:
Shareholders were not complaining when the financial profits were exceptional high in the past, despite the fact that the actual profits were much lower.
As a shareholder, you also share the burden in bad times.

Boeing's problems in a nutshell though are that its corporate pay structure is based on how high you can raise the stock + how pretty you can make the books look, rather than how well you can engineer+manufacture for the longterm good.

It's been nearly a quarter century in the making, but it's manifesting itself in detrimental ways at this point. Not sure how any of this ends well for them, because they haven't taken a single step to rectify it. In fact, even their most recent actions make it worse: particularly relevant to the 787 program.
 
FluidFlow
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Re: Boeing shareholders file lawsuit over 737MAX

Wed Sep 08, 2021 10:30 am

747classic wrote:
Shareholders were not complaining when the financial profits were exceptional high in the past, despite the fact that the actual profits were much lower.
As a shareholder, you also share the burden in bad times.


There is a difference between sharing the burden and actually being lied to.

Any publicly traded company is bound to laws regarding the information flow to the share holders. If the company withholds information or publishes false information it commits a punishable offense.

If the shareholders can prove Boeing lied and/or withheld crucial information regarding the state of the company, the are entitled to compensation.
 
Opus99
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Re: Boeing shareholders file lawsuit over 737MAX

Wed Sep 08, 2021 11:17 am

LAX772LR wrote:
747classic wrote:
Shareholders were not complaining when the financial profits were exceptional high in the past, despite the fact that the actual profits were much lower.
As a shareholder, you also share the burden in bad times.

Boeing's problems in a nutshell though are that its corporate pay structure is based on how high you can raise the stock + how pretty you can make the books look, rather than how well you can engineer+manufacture for the longterm good.

It's been nearly a quarter century in the making, but it's manifesting itself in detrimental ways at this point. Not sure how any of this ends well for them, because they haven't taken a single step to rectify it. In fact, even their most recent actions make it worse: particularly relevant to the 787 program.

I agree with this. But that’s been American culture for a long time. So it goes back to the agency problem. The thing with Boeing is that what is your compensation based off of?

Is Airbus compensation policy any different?

I think Part of Boeing’s problem is they don’t have shareholders that hold them accountable to anything else other than money.

Hopefully now they will
 
ContinentalEWR
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Re: Boeing shareholders file lawsuit over 737MAX

Wed Sep 08, 2021 11:43 am

747classic wrote:
Shareholders were not complaining when the financial profits were exceptional high in the past, despite the fact that the actual profits were much lower.
As a shareholder, you also share the burden in bad times.


Exactly. Boeing was raking in profits, paying sky-high dividends which have been since suspended. The lawsuit is misguided. Boeing's problems stem from an outstandingly poor management of its operation and a way too cosy relationship with regulators in the past, which are among the root causes of its problems.
 
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scbriml
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Re: Boeing shareholders file lawsuit over 737MAX

Wed Sep 08, 2021 12:02 pm

747classic wrote:
Shareholders were not complaining when the financial profits were exceptional high in the past, despite the fact that the actual profits were much lower.
As a shareholder, you also share the burden in bad times.


Everyone accepts that. But there's also a reasonable expectation that the company's management is running said company in a proficient manner. That hasn't appeared to be the case at Boeing for some time.

ContinentalEWR wrote:
The lawsuit is misguided. Boeing's problems stem from an outstandingly poor management of its operation and a way too cosy relationship with regulators in the past, which are among the root causes of its problems.


The only misguided thing is Boeing's management. While the judge threw out some of the claims, she ruled there was enough evidence for other parts to go ahead.
 
SEU
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Re: Boeing shareholders file lawsuit over 737MAX

Wed Sep 08, 2021 12:23 pm

Doesn't suing the company you have shares in, make that company poorer with a worse reputation and thus lowering your stock value ?
 
gmcc
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Re: Boeing shareholders file lawsuit over 737MAX

Wed Sep 08, 2021 12:41 pm

SEU wrote:
Doesn't suing the company you have shares in, make that company poorer with a worse reputation and thus lowering your stock value ?

Maybe in the short term but if the root of the problem gets fixed then profits should be better in the long run. That of course assumes that the company is around for the long term which seems to be pretty good bet barring any unforseen catastrophic turn of events.
 
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par13del
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Re: Boeing shareholders file lawsuit over 737MAX

Wed Sep 08, 2021 12:46 pm

scbriml wrote:
747classic wrote:
Shareholders were not complaining when the financial profits were exceptional high in the past, despite the fact that the actual profits were much lower.
As a shareholder, you also share the burden in bad times.


Everyone accepts that. But there's also a reasonable expectation that the company's management is running said company in a proficient manner. That hasn't appeared to be the case at Boeing for some time.

So was it proficient when they were raking in the profits or was proficiency not a metric then but it is now that the payment of dividends have been suspended?
I am finding it hard to identify with the shareholders, surely they can't believe that if lies were told they only occurred when things went south.
 
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scbriml
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Re: Boeing shareholders file lawsuit over 737MAX

Wed Sep 08, 2021 1:02 pm

par13del wrote:
scbriml wrote:
747classic wrote:
Shareholders were not complaining when the financial profits were exceptional high in the past, despite the fact that the actual profits were much lower.
As a shareholder, you also share the burden in bad times.


Everyone accepts that. But there's also a reasonable expectation that the company's management is running said company in a proficient manner. That hasn't appeared to be the case at Boeing for some time.

So was it proficient when they were raking in the profits or was proficiency not a metric then but it is now that the payment of dividends have been suspended?
I am finding it hard to identify with the shareholders, surely they can't believe that if lies were told they only occurred when things went south.


"Telling lies" is the least of it. Regardless of whether shareholders made money at other times, the suite alleges that the BoD has lost the company billions of dollars because of their actions (or lack thereof) over MAX.

From the linked article:

Boeing Co.’s directors must face an investors’ lawsuit accusing them of failing to properly monitor safety issues and the development of 737 Max jetliners whose two fatal crashes have cost the company more than $20 billion.

and

“While it may seem callous in the face of their losses, corporate law recognizes another set of victims: Boeing as an enterprise, and its stockholders,” the judge said. “The crashes caused the company and its investors to lose billions of dollars in value.”

This judge clearly believes there's a case to answer.
 
morrisond
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Re: Boeing shareholders file lawsuit over 737MAX

Wed Sep 08, 2021 1:17 pm

This is all about the Lawyers and how rich they can get in the United States with Class action lawsuits and taking 30-50% of the proceeds.

If you look at a Stock price chart the price was pretty flat trading in the mid $300's from the beginning of 2018 until Covid. It is hard to see the impact of the MAX.
https://www.cnbc.com/quotes/BA?qsearchterm=BA
 
Dogman
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Re: Boeing shareholders file lawsuit over 737MAX

Wed Sep 08, 2021 2:36 pm

One can argue that it were the shareholders who put the board members and the management under an extreme pressure to increase the value of Boeing shares. In situation like that if you do not deliver then you'll be replaced. Damned if you do, damned if you don't. The shareholders should share the pain that they had caused, even if it was indirectly.
 
HunterATL
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Re: Boeing shareholders file lawsuit over 737MAX

Wed Sep 08, 2021 6:59 pm

This is not a securities fraud suit brought under the federal securities laws relating to shareholder losses. It is a shareholders' derivative action against various present and past members of the Boeing board of directors and various present and past corporate officers to assert Boeing's rights and claims against them. Boeing is merely a nominal defendant as procedurally required for all derivative suits. The essence of the claims is that the defendants engaged in mismanagement in violation of Delaware law and that the defendants must make Boeing, not the shareholders, whole.

As a derivative action, the shareholders are not seeking damages for themselves; they seek to enforce Boeing's rights and desire restitution to Boeing for the defendants' breaches of fiduciary duties to the corporation and to the shareholders. If the shareholders succeed, the defendants and the insurance carriers providing the applicable O&D coverage will pay damages to Boeing, not the shareholders. The defendants will have to cover Boeing's lost profits sustained because of the defendants' breaches of fiduciary duties and statutory violations. The defendants will also have to disgorge all their profits, benefits, and other direct and in-direct compensation payed by Boeing and to return those sums to Boeing. Boeing will also have to make various changes to the corporation's governance to bring it into compliance with Delaware law.

No claim is based upon a change in share price or a manipulation of the securities market. Accordingly, share price or value is completely irrelevant to this complaint and the derivative claims; the shareholders are not seeking to recover any losses they sustained in the stock market.

At this juncture, the chancellor has determined that certain claims may be asserted as derivative claims by shareholders and that the complaint has identified a sufficient factual basis for those certain claims to proceed.
 
Eiszeit
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Re: Boeing shareholders file lawsuit over 737MAX

Wed Sep 08, 2021 7:25 pm

HunterATL wrote:
This is not a securities fraud suit brought under the federal securities laws relating to shareholder losses. It is a shareholders' derivative action against various present and past members of the Boeing board of directors and various present and past corporate officers to assert Boeing's rights and claims against them. Boeing is merely a nominal defendant as procedurally required for all derivative suits. The essence of the claims is that the defendants engaged in mismanagement in violation of Delaware law and that the defendants must make Boeing, not the shareholders, whole.

As a derivative action, the shareholders are not seeking damages for themselves; they seek to enforce Boeing's rights and desire restitution to Boeing for the defendants' breaches of fiduciary duties to the corporation and to the shareholders. If the shareholders succeed, the defendants and the insurance carriers providing the applicable O&D coverage will pay damages to Boeing, not the shareholders. The defendants will have to cover Boeing's lost profits sustained because of the defendants' breaches of fiduciary duties and statutory violations. The defendants will also have to disgorge all their profits, benefits, and other direct and in-direct compensation payed by Boeing and to return those sums to Boeing. Boeing will also have to make various changes to the corporation's governance to bring it into compliance with Delaware law.

No claim is based upon a change in share price or a manipulation of the securities market. Accordingly, share price or value is completely irrelevant to this complaint and the derivative claims; the shareholders are not seeking to recover any losses they sustained in the stock market.

At this juncture, the chancellor has determined that certain claims may be asserted as derivative claims by shareholders and that the complaint has identified a sufficient factual basis for those certain claims to proceed.


This sounds like it would be (in laymens terms): Targeted at the mangement and in subsequence the BOD at that time
 
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Phosphorus
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Re: Boeing shareholders file lawsuit over 737MAX

Wed Sep 08, 2021 7:28 pm

747classic wrote:
Shareholders were not complaining when the financial profits were exceptional high in the past, despite the fact that the actual profits were much lower.
As a shareholder, you also share the burden in bad times.

Not incorrect. But...

What about shareholders who were not onboard for those "exceptionally high" profits, and bought shares recently (relatively, of course). They expected all those nice PowerPoint presentations to be true.

In reality, they were misguided at best, and deliberately lied to at worst.

Don't they have a case?
 
HunterATL
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Re: Boeing shareholders file lawsuit over 737MAX

Wed Sep 08, 2021 7:37 pm

Phosphorus wrote:
747classic wrote:
Shareholders were not complaining when the financial profits were exceptional high in the past, despite the fact that the actual profits were much lower.
As a shareholder, you also share the burden in bad times.

Not incorrect. But...

What about shareholders who were not onboard for those "exceptionally high" profits, and bought shares recently (relatively, of course). They expected all those nice PowerPoint presentations to be true.

In reality, they were misguided at best, and deliberately lied to at worst.

Don't they have a case?


They might have an action, but it is irrelevant to the present topic regarding the derivative suit. In this lawsuit, the shareholders seek to enforce Boeing's right against present and past officers and directions, not the shareholders' rights against them.
 
HunterATL
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Re: Boeing shareholders file lawsuit over 737MAX

Wed Sep 08, 2021 7:38 pm

Eiszeit wrote:
HunterATL wrote:
This is not a securities fraud suit brought under the federal securities laws relating to shareholder losses. It is a shareholders' derivative action against various present and past members of the Boeing board of directors and various present and past corporate officers to assert Boeing's rights and claims against them. Boeing is merely a nominal defendant as procedurally required for all derivative suits. The essence of the claims is that the defendants engaged in mismanagement in violation of Delaware law and that the defendants must make Boeing, not the shareholders, whole.

As a derivative action, the shareholders are not seeking damages for themselves; they seek to enforce Boeing's rights and desire restitution to Boeing for the defendants' breaches of fiduciary duties to the corporation and to the shareholders. If the shareholders succeed, the defendants and the insurance carriers providing the applicable O&D coverage will pay damages to Boeing, not the shareholders. The defendants will have to cover Boeing's lost profits sustained because of the defendants' breaches of fiduciary duties and statutory violations. The defendants will also have to disgorge all their profits, benefits, and other direct and in-direct compensation payed by Boeing and to return those sums to Boeing. Boeing will also have to make various changes to the corporation's governance to bring it into compliance with Delaware law.

No claim is based upon a change in share price or a manipulation of the securities market. Accordingly, share price or value is completely irrelevant to this complaint and the derivative claims; the shareholders are not seeking to recover any losses they sustained in the stock market.

At this juncture, the chancellor has determined that certain claims may be asserted as derivative claims by shareholders and that the complaint has identified a sufficient factual basis for those certain claims to proceed.


This sounds like it would be (in laymens terms): Targeted at the mangement and in subsequence the BOD at that time


That is why the named defendants are the past and present officers and directors. Boeing is merely a nominal defendant.
 
LDRA
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Re: Boeing shareholders file lawsuit over 737MAX

Wed Sep 08, 2021 9:10 pm

MrHMSH wrote:
Could the good news surrounding Boeing please make itself known...

This IS good news. Hopefully this drives some changes at top level. Money talks
 
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keesje
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Re: Boeing shareholders file lawsuit over 737MAX

Wed Sep 08, 2021 9:53 pm

I think share holders were naive when they were told free cash flow is all that really mattered. And seduced by pumped-up and overly optimistic stock prices. They dismissed writing on the wall for many years. Many of them still do. Whining now is too late IMO.
 
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scbriml
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Re: Boeing shareholders file lawsuit over 737MAX

Wed Sep 08, 2021 10:01 pm

Dogman wrote:
One can argue that it were the shareholders who put the board members and the management under an extreme pressure to increase the value of Boeing shares. In situation like that if you do not deliver then you'll be replaced. Damned if you do, damned if you don't. The shareholders should share the pain that they had caused, even if it was indirectly.


If you're going to argue it, then at least supply some evidence to support your argument.
 
HunterATL
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Re: Boeing shareholders file lawsuit over 737MAX

Wed Sep 08, 2021 10:11 pm

keesje wrote:
I think share holders were naive when they were told free cash flow is all that really mattered. And seduced by pumped-up and overly optimistic stock prices. They dismissed writing on the wall for many years. Many of them still do. Whining now is too late IMO.


What the shareholders knew, believed, did, didn't do, etc. is completely irrelevant to this derivative action. The shareholders are suing to assert Boeing's rights against the past and present officers and directions because Boeing has refused to sue them. The shareholders individual, direct rights are not at issue. Those claims are in a completely different lawsuit, in a different court system, completely unrelated to this action in Delaware chancery court.
 
sxf24
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Re: Boeing shareholders file lawsuit over 737MAX

Thu Sep 09, 2021 12:01 am

keesje wrote:
I think share holders were naive when they were told free cash flow is all that really mattered. And seduced by pumped-up and overly optimistic stock prices. They dismissed writing on the wall for many years. Many of them still do. Whining now is too late IMO.


Without free cash flow, there is no ability for a company to exist. To be a going concern, a company must be generating free cash flow or have a darn good plan to do so in the near future. I think a discussion about an appropriate level of free cash flow for an industrial company is beyond the capabilities of this audience.
 
DartHerald
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Re: Boeing shareholders file lawsuit over 737MAX

Thu Sep 09, 2021 12:01 pm

Boeing's problems in a nutshell though are that its corporate pay structure is based on how high you can raise the stock + how pretty you can make the books look, rather than how well you can engineer+manufacture for the longterm good


The problem with corporate pay in the form of shares/share options is that there is the temptation to grow the share price artificially rather than through real commercial success. A bonus system based on tangible, physical results (deliveries, operating margins etc.) would help to remove some of those temptations. I wonder if that is how Airbus do things, given the annual "13th month".
 
sxf24
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Re: Boeing shareholders file lawsuit over 737MAX

Thu Sep 09, 2021 12:06 pm

DartHerald wrote:
Boeing's problems in a nutshell though are that its corporate pay structure is based on how high you can raise the stock + how pretty you can make the books look, rather than how well you can engineer+manufacture for the longterm good


The problem with corporate pay in the form of shares/share options is that there is the temptation to grow the share price artificially rather than through real commercial success. A bonus system based on tangible, physical results (deliveries, operating margins etc.) would help to remove some of those temptations. I wonder if that is how Airbus do things, given the annual "13th month".


You make good points. If people actually read Boeing’s disclosures on compensation, they’d find it is largely based on tangible results, not share price. The entire thesis of many arguments here is false.
 
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Revelation
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Re: Boeing shareholders file lawsuit over 737MAX

Thu Sep 09, 2021 3:25 pm

HunterATL wrote:
What the shareholders knew, believed, did, didn't do, etc. is completely irrelevant to this derivative action. The shareholders are suing to assert Boeing's rights against the past and present officers and directions because Boeing has refused to sue them. The shareholders individual, direct rights are not at issue. Those claims are in a completely different lawsuit, in a different court system, completely unrelated to this action in Delaware chancery court.

Well, yes, Boeing itself refuses to sue because one of the past board members is the current CEO.

It's sad that the shareholders have to launch such a suit.

So far the only kind of accountability has come by Boeing paying victims, customers and even the government via fines.

All this has done is damaged the shareholders more and not damaged the board members or senior executives.

As mentioned directors and senior executives get paid handsomely when things go well, so they should expect to take a hit when things do not, IMO.

Ideally this would shed more light on what went wrong on the engineering side, but I doubt it will, this is all about settling the score financially.
 
dc10lover
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Re: Boeing shareholders file lawsuit over 737MAX

Thu Sep 09, 2021 6:27 pm

If you're a little Stock Holder, guess you're not involved. Those filing suit are the big (private) Stock Holders. It will be interesting to see the outcome.
 
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kanban
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Re: Boeing shareholders file lawsuit over 737MAX

Thu Sep 09, 2021 6:45 pm

If the "Board" is responsible for stockholder losses, why can't the laid off, terminated and forced early retirements employees also sue the board for mismanagement?

In reality the board and most corporate officers are so far from the actual production process (from engineering to delivery) and isolated by layers of gatekeepers and head nodders, they really have little to do with anything besides quarterly socializing and rubber stamping.
 
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Revelation
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Re: Boeing shareholders file lawsuit over 737MAX

Thu Sep 09, 2021 7:08 pm

kanban wrote:
If the "Board" is responsible for stockholder losses, why can't the laid off, terminated and forced early retirements employees also sue the board for mismanagement?

In reality the board and most corporate officers are so far from the actual production process (from engineering to delivery) and isolated by layers of gatekeepers and head nodders, they really have little to do with anything besides quarterly socializing and rubber stamping.

The role of the Board is quite different than the others you list.

The Board members are elected representatives of the share holders who are the owners of the Company. Their job is to select and oversee the Corporate Officers who manage the Company. They have access to funding to do whatever it takes to do that job. For instance, they easily could have decided to have their own investigation of the first crash instead of just trusting that the management was giving them the correct reading on the situation.

In this case it is being alleged the Board Members did not exercise sufficient oversight of Management, and in particular with regard to safety issues.

I can see how this case can go forward because while the first crash may not have been predictable it seems to me you can make the case that the second one was. All it took was a good look at the ADS-B data to see multiple activations in action. Boeing itself was weeks away from a fix when the second crash happened so someone in-house had to know what could happen should there be an issue with the active AoA sensor and decided a fix was needed. It seems there's more than enough grounds for lawyers to suggest that the Board should have brought in independent experts after the first crash to do a deep dive on what happened and the risk of it happening again.

Yes, I realize that the Board is largely ceremonial, but they do sign up for some pretty serious responsibilities when they agree to be a Board member, and some times even wealthy business magnates get the brown end of the stick. In this case it'd be the brown end of a gilded rod, but it'll still be brown.
 
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lightsaber
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Re: Boeing shareholders file lawsuit over 737MAX

Thu Sep 09, 2021 8:48 pm

Folks, the topic is not about accounting blocks.

Also, discuss the topic, not other users.
 
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keesje
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Re: Boeing shareholders file lawsuit over 737MAX

Thu Sep 09, 2021 9:35 pm

lightsaber wrote:
Folks, the topic is not about accounting blocks.

Also, discuss the topic, not other users.


Ok excuse me. To sfx, einzeit, 2175305, Polot: sorry didn't read your responses, another thread I guess.

Main point of the shareholders seems to be "the Board should have heeded but instead ignored" a "red flag" about the aircrafts' safety systems, known as MCAS, following the first crash.
..
At the beginning of the year Boeing agreed to pay $2.5 billion in fines and settle a criminal charge over claims they defrauded regulators overseeing the 737 MAX.

https://www.industryweek.com/leadership ... wo-crashes
 
F9Animal
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Re: Boeing shareholders file lawsuit over 737MAX

Fri Sep 10, 2021 3:49 am

I have not been shy about my feelings on the top brass at Boeing. Their corporate structure is pretty awful, and it doesn't appear it's gotten any better since the 787 mess they had. The amount of dishonesty by the top has been unreal. I'm a small shareholder and really wished I had never invested in Boeing. I also not regret selling before it took a dive.

My hopes are that their entire structure is cleaned from top to bottom. I never in my life imagined such a cluster. Whatever happened to being blunt and straight forward with people?

The MAX mess will be a black eye on this company for many years to come.

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