Arthur Andersen's conviction and collapse

Arthur Andersen served as Enron's outside auditor throughout the period when the energy company was concealing billions in debt through off-balance-sheet partnerships, and as regulators began circling in late 2001, Andersen employees shredded documents related to its Enron audits. A federal jury found the firm guilty of obstruction of justice on June 15, 2002 — the first time an accounting firm had ever been convicted of a felony — for what prosecutors described as corruptly persuading employees to destroy evidence. Facing a $500,000 fine and, more critically, the loss of its ability to audit publicly traded companies, the firm agreed to surrender its licenses and ceased auditing public companies by the end of August 2002, putting some 28,000 employees worldwide out of work. The US Supreme Court unanimously overturned the conviction in 2005 on narrow legal grounds related to the jury instructions, but by then the firm no longer existed in any meaningful form, and the ruling could not undo the reputational collapse.