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.
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