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Boeing Under Fire with a Putative Class Action

An investor, Tribhuwan Bisht, slapped Boeing with a putative class action lawsuit after being tipped off that Boeing had utilized dishonest accounting practices. Bischt caught wind of the practices through a media report documenting the alleged misbehavior. The tip came from Bloomberg Media's coverage of a possible SEC investigation into the 787 Dreamliner and 747 Jumbo's account.

According to Bisht's lawsuit, Boeing manipulated data to deceive stockholders. The complaint asserts that Boeing spread production costs for airplane models over decades, which gave investors the impression that the company was performing better than it was. According to the complaint, the company would divide the costs of a specific airliner, say the 787 Dreamliner, over the costs of all airlines.

Boeing has flatly denied any wrongdoing and contends that the practice was not a recent development in accounting; rather, the policy had been in use for decades. Commenting on the accounting practice, Boeing explained the SEC has "broadly blessed its use in the aerospace industry." Boeing CEO Dennis Muilenberg decried the Bloomberg report at an investors' meeting this month, saying "the articles that were out there raised some questions about program accounting, and that is a different construct than many other industries use because of the long-cycle nature." Apparently this was not enough to assure all investors, as Boeing's stock dipped 6.8 percent after publication of the alleged malfeasance.

The legal team at SFMS has significant experience litigating securities matters. If you have any questions regarding this subject or this posting, please contact Alec Berin (aberin@sfmslaw.com) or Chiharu Sekino (csekino@sfmslaw.com). We can also be reached toll-free at (866) 540-5505.

Shepherd, Finkelman, Miller & Shah, LLP is a law firm with offices in California, Connecticut, Florida, New Jersey, New York, Pennsylvania and Wisconsin. SFMS is an active member of Integrated Advisory Group (www.iaginternational.org), which provides us with the ability to provide our clients with access to excellent legal and accounting resources throughout the globe. For more information about our firm, please visit us at www.sfmslaw.com.

Sources:

https://www.law360.com/securities/articles/761951/boeing-facing-suit-over-possible-sec-investigation

https://ww.bloomberg.com/news/articles/2016-02-11/boeing-said-to-face-sec-probe-into-dreamliner-and-747-accounting

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