The Supreme Court Has Overturned Arthur Andersen’s Conviction

    June 1, 2005
    Chris Crum

Accounting firm Arthur Andersen’s conviction for obstructing justice was overturned by the United States Supreme Court yesterday. The firm was convicted for destroying documents related to Enron before it collapsed.

The decision to overturn the conviction was unanimous. Arthur Andersen’s conviction three years ago was deemed improper because the jury instructions were so vague that the jurors couldn’t properly determine the verdict.

The Supreme Court Has Overturned Arthur Andersen's Conviction

“The jury instructions here were flawed in important respects,” wrote Chief Justice William H. Rehnquist. They “simply failed to convey the requisite consciousness of wrongdoing.”

The firm basically fell apart in 2002 as a result of the conviction. Nearly 30,000 employees of the firm lost their jobs. MarketWatch explains a little about what happened:

According to lawyers for Andersen, the lower court wrongly instructed the federal jury in the case about what issues it could use to convict the company…

Last year in July, Former Enron Chairman Kenneth L. Lay was indicted by a federal grand jury in Houston, almost three years after the energy company collapsed.

The Andersen case inspired tougher penalties for corporate wrongdoers and helped bring about 2002’s Sarbanes-Oxley Act, noted Professor John Coffee of Columbia University Law School.

Prosecutors accused Andersen of having its employees get rid of company records while the Securities and Exchange Commission prepared to investigate Enron’s accounting practices.

Andersen said that it was only reminding its employees of a “document-retention policy,” which included the elimination of such documents following the completion of an audit.

The company continued to shred documents unitl it received a subpoena from the SEC on Nov. 8, 2001, for doing so with its records related to Enron.
“It is, of course, not wrongful for a manager to instruct his employees to comply with a valid document retention policy,” wrote Rehnquist.

Andersen, which has also been involved in several other civil lawsuits, only has about 200 employees now, who apparently spend a great deal of their time dealing with legal work.

Chris is a staff writer for WebProNews. Visit WebProNews for the latest ebusiness news.