PittsburghAfterDark
CAGiversary!
I have to look at this Supreme Court decision today and just shake my head in disgust. Arthur Anderson was one of the top 5 accounting firms in the country seemingly forever. If you have a job at a top 5 firm you were practically assured work for life, accountants don't really have swings in their business at this level. Regardless of businesses making or losing money, they still pay the accountants.
Back in 2002 the DOJ went after AA because they were Enron's auditors. At the heart of the court battle was their maintence of records. Did Anderson destroy records as a matter of business practicality? Or did they destroy records as a matter of obstruction. How many years back did they maintain their records? It's unclear from a legal or regulatory standpoint how long audit records need to be kept from what I'm gathering from this decision.
Was this destruction of records one compartment of the firm? Or policy for the corporation. Were there universal standards? Unclear.
So, as a result of the 6th District decision AA was found to be guilty of criminal obstruction of justice. Result? The firm's credibility was immediately destroyed. Clients fled in droves and 28,000 people lost their jobs. Now many of them followed their clients to one of the remaining top 4 accounting firms. However a multi-billion dollar company was destroyed, stockholders were devistated and many thousands of those people didn't regain employment in their field all because of a legal decision by judges.
Now, the USSC reversed the conviction today. UNANIMOUSLY! 9-0 the decision was overturned. Now, who's going to sue the courts? Who is going to hold the 6th district responsible for countless wrecked lives? Who is going to repay investors that lost billions?
Absolutely disgraceful that a company of this stature can be destroyed by incompetent judges. Is there any wonder why disdain for the Circuit Courts exists?
Court Overturns Arthur Andersen Conviction
By HOPE YEN
The Associated Press
Tuesday, May 31, 2005; 11:25 AM
WASHINGTON -- The Supreme Court on Tuesday overturned the conviction of the Arthur Andersen accounting firm for destroying Enron Corp.-related documents before the energy giant's collapse.
In a unanimous opinion, justices said the former Big Five accounting firm's June 2002 obstruction-of-justice conviction _ which virtually destroyed Andersen _ was improper. The decision said jury instructions at trial were too vague and broad for jurors to determine correctly whether Andersen obstructed justice.
"The jury instructions here were flawed in important respects," Chief Justice William H. Rehnquist wrote for the court.
The ruling is a setback for the Bush administration, which made prosecution of white-collar criminals a high priority following accounting scandals at major corporations. After Enron's 2001 collapse, the Justice Department went after Andersen first.
Enron crashed in December 2001, putting more than 5,000 employees out of work, just six weeks after the energy company revealed massive losses and writedowns.
Subsequently, as the Securities and Exchange Commission began looking into Enron's convoluted finances, Andersen put in practice a policy calling for destroying unneeded documentation.
Government attorneys argued that Andersen should be held responsible for instructing its employees to "undertake an unprecedented campaign of document destruction."
But in his opinion, Rehnquist noted that jurors were instructed to convict Andersen if the accounting firm had an "improper purpose," such as an intent to impede or subvert fact-finding in an "official proceeding." He noted jurors were instructed to convict, even if Andersen mistakenly thought it was acting legally.
At trial, Andersen argued that employees who shredded tons of documents followed the policy and there was no intent to thwart the SEC investigation.
The probe into Andersen led to just one guilty plea, from the firm's former top Enron auditor, David Duncan. But the conviction of the Chicago firm forced it to surrender its accounting license and stop conducting public audits. Some 28,000 workers had to find other jobs, and the company was left a shell of its former self.
A ruling against Andersen would have had onerous consequences for businesses, whose discarding of files is an everyday occurrence. Experts say companies would have to keep all files for fear that any disposal, however innocent, could subject them to potential prosecution.
According to Andersen attorneys, notes and drafts of documents were thrown away under the firm's document-retention policy in part because they were preliminary and could have been misconstrued.
Andersen's appeal was backed by the National Association of Criminal Defense Lawyers. It argued in a friend-of-the-court filing that broad characterization of "obstruction" used in the jury instructions would also unfairly punish criminal attorneys who advise their clients to withhold evidence in legal ways.
Such a broad reading could open defense lawyers and others to prosecution if they merely advise clients of their rights to assert legal privileges or review document retention policies, the criminal defense group said.
The case is Andersen v. U.S., 04-368.
Link
Back in 2002 the DOJ went after AA because they were Enron's auditors. At the heart of the court battle was their maintence of records. Did Anderson destroy records as a matter of business practicality? Or did they destroy records as a matter of obstruction. How many years back did they maintain their records? It's unclear from a legal or regulatory standpoint how long audit records need to be kept from what I'm gathering from this decision.
Was this destruction of records one compartment of the firm? Or policy for the corporation. Were there universal standards? Unclear.
So, as a result of the 6th District decision AA was found to be guilty of criminal obstruction of justice. Result? The firm's credibility was immediately destroyed. Clients fled in droves and 28,000 people lost their jobs. Now many of them followed their clients to one of the remaining top 4 accounting firms. However a multi-billion dollar company was destroyed, stockholders were devistated and many thousands of those people didn't regain employment in their field all because of a legal decision by judges.
Now, the USSC reversed the conviction today. UNANIMOUSLY! 9-0 the decision was overturned. Now, who's going to sue the courts? Who is going to hold the 6th district responsible for countless wrecked lives? Who is going to repay investors that lost billions?
Absolutely disgraceful that a company of this stature can be destroyed by incompetent judges. Is there any wonder why disdain for the Circuit Courts exists?
Court Overturns Arthur Andersen Conviction
By HOPE YEN
The Associated Press
Tuesday, May 31, 2005; 11:25 AM
WASHINGTON -- The Supreme Court on Tuesday overturned the conviction of the Arthur Andersen accounting firm for destroying Enron Corp.-related documents before the energy giant's collapse.
In a unanimous opinion, justices said the former Big Five accounting firm's June 2002 obstruction-of-justice conviction _ which virtually destroyed Andersen _ was improper. The decision said jury instructions at trial were too vague and broad for jurors to determine correctly whether Andersen obstructed justice.
"The jury instructions here were flawed in important respects," Chief Justice William H. Rehnquist wrote for the court.
The ruling is a setback for the Bush administration, which made prosecution of white-collar criminals a high priority following accounting scandals at major corporations. After Enron's 2001 collapse, the Justice Department went after Andersen first.
Enron crashed in December 2001, putting more than 5,000 employees out of work, just six weeks after the energy company revealed massive losses and writedowns.
Subsequently, as the Securities and Exchange Commission began looking into Enron's convoluted finances, Andersen put in practice a policy calling for destroying unneeded documentation.
Government attorneys argued that Andersen should be held responsible for instructing its employees to "undertake an unprecedented campaign of document destruction."
But in his opinion, Rehnquist noted that jurors were instructed to convict Andersen if the accounting firm had an "improper purpose," such as an intent to impede or subvert fact-finding in an "official proceeding." He noted jurors were instructed to convict, even if Andersen mistakenly thought it was acting legally.
At trial, Andersen argued that employees who shredded tons of documents followed the policy and there was no intent to thwart the SEC investigation.
The probe into Andersen led to just one guilty plea, from the firm's former top Enron auditor, David Duncan. But the conviction of the Chicago firm forced it to surrender its accounting license and stop conducting public audits. Some 28,000 workers had to find other jobs, and the company was left a shell of its former self.
A ruling against Andersen would have had onerous consequences for businesses, whose discarding of files is an everyday occurrence. Experts say companies would have to keep all files for fear that any disposal, however innocent, could subject them to potential prosecution.
According to Andersen attorneys, notes and drafts of documents were thrown away under the firm's document-retention policy in part because they were preliminary and could have been misconstrued.
Andersen's appeal was backed by the National Association of Criminal Defense Lawyers. It argued in a friend-of-the-court filing that broad characterization of "obstruction" used in the jury instructions would also unfairly punish criminal attorneys who advise their clients to withhold evidence in legal ways.
Such a broad reading could open defense lawyers and others to prosecution if they merely advise clients of their rights to assert legal privileges or review document retention policies, the criminal defense group said.
The case is Andersen v. U.S., 04-368.
Link
up on the judicial systems fault... wait, it was the judges fault.
