Risk & Compliance

Closing the Books on Andersen and Enron

The judge who presided over Andersen's 2002 conviction, since overturned by the Supreme Court, has approved the settlement between Enron investors ...
Dave Cook and Stephen TaubMarch 12, 2007

Enron investors are due to receive $72.5 million from its former auditor, Arthur Andersen, reported Bloomberg.

According to the wire service, U.S. District Judge Melinda Harmon approved the class-action settlement — agreed to in 2005 but first made public only last November — after plaintiffs’ attorneys acknowledged that this was about as much money as they could recover. Investors will also receive $2 million in accrued interest, Bloomberg added.

“This is a very good settlement,” Keith Park, a lawyer for the University of California Board of Regents, the lead plaintiffs in the class action, reportedly told Harmon at a hearing last week.

Altogether, investors have recovered more than $7.3 billion in settlements with Enron’s former lenders and lawyers, according to the report.

The wire service noted that Patrick Dorton, a spokesman for Arthur Andersen, said in November that the firm admitted no wrongdoing as part of the agreement but was not immediately available to comment on the judge’s decision.

In another case presided over by Judge Harmon, in 2002 Andersen was convicted of obstruction of justice for destroying Enron-related documents, and the firm was forced to close down its auditing practice and most of its offices.

Three years later, the Supreme Court overturned the conviction, ruling 9-0 that Judge Harmon’s jury instructions were faulty because they didn’t require proof that Andersen officials knew they were breaking the law.

By then, noted Bloomberg, Andersen’s 85,000-strong work force, and its clients, had scattered. Today, about 200 lawyers and administrators oversee litigation and manage its remaining sites, including a conference center near its Chicago headquarters, according to the wire service.