Arthur Andersen: Not Guilty (Yet)
Unless you've been hiding out, you've almost certainly heard the news that the US Supreme Court yesterday overturned the conviction of Arthur Andersen for destroying documents in the Enron fiasco. You can find news coverage here and here (one-time registration required). The opinion can be found here.
What does this mean? Arthur Andersen (the accounting firm) no longer exists; instead of a Big Five accounting firms we have a Big Four. Will Arthur Andersen rise from the dead? That's just not going to happen. Will the US retry Andersen? I have no idea, but it's irrelevant. Andersen is dead.
As the Wall Street Journal points out in an editorial today, going after the partners would have been a better idea. Most of the employees of Andersen had no idea of what was going on. Does anyone really believe that a tax partner in Seattle knew what the partners in Houston were doing? It was guilt by association. At least the US Justice Department has apparently learned from this. In recent white-collar cases, the Justice Department has gone after the principals.
What does this mean? Arthur Andersen (the accounting firm) no longer exists; instead of a Big Five accounting firms we have a Big Four. Will Arthur Andersen rise from the dead? That's just not going to happen. Will the US retry Andersen? I have no idea, but it's irrelevant. Andersen is dead.
As the Wall Street Journal points out in an editorial today, going after the partners would have been a better idea. Most of the employees of Andersen had no idea of what was going on. Does anyone really believe that a tax partner in Seattle knew what the partners in Houston were doing? It was guilt by association. At least the US Justice Department has apparently learned from this. In recent white-collar cases, the Justice Department has gone after the principals.