Class Action Against Arthur Andersen Settles for $73 Million
Posted by
Scott SmithMarch 15, 2007 3:17 PMEnron Corporation shareholders have settled a class action lawsuit against Arthur Andersen, LLP for $72.5 million as approved by Judge Melinda Harmon of the United States District Court for the Southern District of Texas.
In a related matter, Arthur Andersen was found guilty of criminal charges based upon facts common to the class action. The class action settlement coupled with the six week criminal trial and ten days of jury deliberations resulting in Andersen's conviction for obstructing justice after destroying Enron documents while on notice of the federal investigation sealed the fate of the once large accounting firm.
Andersen now faces up to five years probation plus a $500,000.00 fine on the criminal matter. District Attorney Andrea Weissman said the case sends a signal, "When you expect the police, don't destroy evidence". For Andersen the police was the Securities and Exchange Commission. However the prosecution is not finished with Arthur Andersen. Jurors, when questioned after the verdict, agreed that Nancy Temple was the "corrupt persuader". Temple was the Andersen attorney who sent an October 12 email that reminded executives the firm had a policy to destroy documents.
The criminal verdict will likely be a fatal blow for the 89 year old accounting firm which is now operating as a shadow of its once mighty self. The firm has laid off over 7,000 employees, sold most of its practices in the United States and has lost more than 650 of it's 2,300 public audit clients this year. Nevertheless, Andersen intends to file an appeal once sentencing has concluded on October 11, 2007.