Arthur Andersen shredded Enron documents and destroyed an 89-year-old Big Five firm

Arthur Andersen was one of the Big Five accounting firms and the auditor of Enron. As Enron's fraud unraveled in 2001, the SEC served Andersen with a subpoena on November 8. In the days that followed, an in-house lawyer, Nancy Temple, circulated emails reminding the Houston audit team of the firm's document-retention policy. The lead Enron partner, David Duncan, and his team then shredded tons of Enron audit papers and deleted tens of thousands of emails and computer files — work that continued even as the investigation intensified.

The destruction became public in January 2002, when Andersen announced it had discovered that documents had been destroyed in Houston. In March 2002 a federal grand jury indicted the firm, and on June 15, 2002, a Chicago jury convicted Arthur Andersen of obstruction of justice. Because the SEC does not accept audits from convicted felons, the firm surrendered its CPA licenses and its right to practice before the SEC on August 31, 2002 — effectively ending it. Clients fled, and its practices were absorbed by rivals.

On May 31, 2005, the Supreme Court unanimously reversed the conviction in Arthur Andersen LLP v. United States, ruling that the jury instructions had been too vague. By then it was far too late: the firm had shrunk from about 28,000 US employees to a couple of hundred. The Big Five became the Big Four, and the episode — together with Enron and WorldCom — helped drive the Sarbanes-Oxley Act of 2002.