Isn't This Securities Fraud?: Boeing

Did Boeing Mislead Markets? Probably.

In the wake of the Boeing 737 MAX8 fiasco, it seems more and more likely that the two crashes were a result of a design flaw in the airplane. It recently came to light that there were "shared similarities" between the Lion Air and Ethiopian Airlines crashes.

Now, Boeing seems to have misled the FAA in getting approval for the plane and now could be in trouble:

"A grand jury in Washington, D.C., issued a broad subpoena dated March 11 to at least one person involved in the 737 MAX’s development, seeking related documents, including correspondence, emails and other messages."

It's a messy situation for Boeing, and it could get messier -- one potential crime people aren't talking about is securities fraud.

Securities fraud "is a practice that induces investors to make purchase or sale decisions on the basis of false information... Generally speaking, securities fraud... occurs when investors are enticed to part with their money based on untrue statements."

Here's this statement from Boeing, as reported by CNN Business.

"Safety is Boeing's number one priority and we have full confidence in the safety of the Max," Boeing said in a statement Tuesday. "We understand that regulatory agencies and customers have made decisions that they believe are most appropriate for their home markets. It is also important to note that the Federal Aviation Administration is not mandating any further action at this time, and based on the information currently available, we do not have any basis to issue new guidance to operators."

Well, "we do not have any basis to issue new guidance to operators" definitely seems like an untrue statement, especially in light of the new evidence that Boeing actually had misled the FAA earlier about its plane. Boeing definitely had a basis to issue new guidance, but they said they had none. This quote most definitely added confidence to the stock price. So we have false information inducing investor decisions. Sounds like securities fraud to me. Someone should get on that.