Arthur Andersen Convicted, Destroying 85,000 Jobs Worldwide

On June 15, 2002, a federal jury convicted Arthur Andersen LLP of obstruction of justice for shredding thousands of Enron-related documents. The verdict effectively destroyed one of the world’s most prestigious accounting firms, eliminating 85,000 jobs globally and marking the last time a major corporation faced existential consequences for complicity in fraud.

Federal regulations prohibit convicted felons from auditing public companies, meaning the conviction was a corporate death sentence. Arthur Andersen surrendered its CPA license on August 31, 2002, and ceased operations in the United States. From a position as one of the “Big Five” accounting firms with operations in 84 countries and revenues exceeding $9 billion, Andersen effectively ceased to exist within months.

The conviction eliminated 28,000 U.S. jobs and 85,000 positions worldwide. Clients scrambled to find new auditors, and the accounting industry consolidated from the “Big Five” to the “Big Four” firms that dominate today. The firm’s complete destruction sent shockwaves through corporate America, demonstrating that institutional complicity in fraud could result in corporate execution.

In 2005, the Supreme Court unanimously overturned the conviction due to errors in jury instructions, but the reversal came too late—Arthur Andersen was already defunct. The case remains the last instance of a major corporation being destroyed for aiding corporate fraud. After 2008, when massive Wall Street firms engaged in systematic fraud that crashed the global economy, prosecutors chose deferred prosecution agreements and fines paid by shareholders instead of criminal prosecution—a stark retreat from the accountability moment of 2002.