Rhode Island’s office of the general treasurer, acting on behalf of the Employees’ Retirement System of Rhode Island, has sued Boeing Co., alleging the airplane manufacturer made false and misleading statements that it would tighten its oversight of safety and quality issues, inflating its share price as a result.
The complaint, State of Rhode Island Office of the General Treasurer, on behalf of the Employees’ Retirement System of the State of Rhode Island v. The Boeing Co., et al., was filed in U.S. District Court for the Eastern District of Virginia by law firm Labaton Keller Sucharow LLP and seeks class action status.
The complaint alleges that Boeing failed to disclose it had been prioritizing profits over safety, following an event on January 5 when a panel of an Alaska Airlines flight on a Boeing 737 Max 9 aircraft blew off midair, resulting in the grounding of the entire 737 Max 9 fleet for additional safety inspections and in increased scrutiny of Boeing’s safety practices and oversight.
As a result, Boeing stock declined 18.9% between January 5 and January 25, from $249.00 to $201.88, or $47.12 per share.
“Boeing betrayed the trust of Rhode Island pensioners and must be held accountable for [its] actions,” said Rhode Island General Treasurer James Diossa in a statement announcing the litigation. “The disregard for safety displayed in [this] series of events involving Boeing aircrafts [is] deeply concerning. We believe that this case has the potential to effect changes in Boeing’s practices to protect passengers and ensure their safety in the future.”
According to court documents, the ERSRI system had purchased 24,870 shares of Boeing between November 7, 2019, when the company’s stock was $357.88 per share, and November 30, 2022, the last time the fund purchased Boeing stock, when the shares traded as low as $179.83. The fund also sold 7,145 shares between December 29, 2020, and December 22, 2023.
According to a spokesperson for the attorney general’s office, Rhode Island pensioners suffered nearly a $3.6 million loss due to Boeing’s actions during the proposed class period. That period runs from October 23, 2019, when the suit says Boeing claimed that the company was “making progress towards the safe return to service of the 737 MAX,” through January 24, 2024. The deadline for investors to position themselves as lead plaintiff in the lawsuit is April 1, according to the spokesperson.
In 2019, Boeing faced multiple class action lawsuits after two Boeing 737 Max 8 crashes killed 346 people that year due to malfunctions in the plane’s flight control software.
Shares of Boeing closed at $209.38 on February 2, down from a high of $440.62 on March 1, 2019. In 2024 to date, Boeing shares are down 16.83%.
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Tags: Boeing, Employees’ Retirement System of Rhode Island, ERSRI, Rhode Island