Shareholders on Tuesday filed a new lawsuit against Boeing, accusing the company of defrauding them by concealing safety deficiencies in its 737 Max planes before two fatal crashes led to their worldwide grounding.
The proposed class action filed in a Chicago federal court seeks damages for alleged securities fraud after Boeing’s market value tumbled by US$34 billion within two weeks after the March 10 crash of a 737 Max jet belonging to Ethiopian Airlines.
Boeing’s Chief Executive, Dennis Muilenburg and Chief Financial Officer Gregory Smith were also named as defendants in the complaint which has one Mr. Richard Seeks as the lead plaintiff.
According to the complaint, Boeing ‘effectively put profitability and growth ahead of airplane safety and honesty’ by rushing the 737 Max to market to compete with Airbus SE while leaving out extra or optional features designed to prevent the Ethiopian Airlines and Lion Air crashes.
Mr. Seeks said Boeing’s compromises began to emerge after the Ethiopian Airlines crash killed all 157 on board, barely five months after the Lions Air Crash killed 189 persons.
Seeks added that he bought 300 Boeing shares in early March and sold them at a loss within the past two weeks.
The lawsuit seeks damages for Boeing stock investors from January 8 to March 21. Shareholders often file lawsuits accusing companies of securities fraud for concealing material negative information that causes the stock price to decline upon becoming public.
The Chicago-based Boeing also faces many other lawsuits over the crashes including those by the victim’s families and by participants in its employee retirement plans.
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