The $217m settlement is the second largest amount ever paid out by one of the Big Five audit firms. Litigants claimed that Andersen had been negligent and ignored evidence that the directors of the business were basically engaged in a pyramid-selling scam.
Meanwhile, in Houston, Texas, the firm went on trial on obstruction of justice charges in connection with its audit work with failed energy giant Enron. Prosecutors were able to overcome Andersen's objections and will be free to introduce evidence against the firm which details claims made against it in connection with other business. Federal procecutors are keen to demonstrate a pattern of behaviour and will refer, amongst others, to Andersen involvement with Waste Management Inc. The US Securities & Exchange Commission (SEC) fined the firm $7m in connection with that audit.
The Judge ruled that prior evidence could be submitted, but said that the jury would be instructed that previous SEC actions should not be taken as proof of wrongdoing in the Enron case.
Andersen Settles
Troubled audit firm Arthur Andersen has now agreed to settle civil cases stemming from the collapse of the Baptist Foundation of Arizona. Around 13,000 mostly elderly investors lost around $570m in America's largest ever non-profit bankruptcy.
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