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High court overturns major conviction in Enron case

The reversal on technical grounds marks setback for the US Justice Department.

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It's probably too late to matter, but Arthur Andersen's name is now cleared.

The big Chicago-based accounting firm, tarred by the Enron scandal and virtually a shell of itself since it lost an accounting license, is no longer a black sheep. On Tuesday, the US Supreme Court ruled the trial judge's instructions when it came to the heart of the case - obstruction of justice - were too vague. It overturned the conviction.

But even before the Court's decision, the case resulted in a lot of change in corporate America. "That conviction resulted in a new era of corporate conduct and compliance," says Kirby Behre, a partner at Paul Hastings, a Washington law firm. "It emboldened prosecutors to pursue more cases."

At the same time that the government was becoming more aggressive at pursuing white-collar crime, it was also pulling back from actually indicting a legitimate company. After federal prosecutors won their Houston case against Andersen, some 28,000 workers had to find new jobs because the company virtually went out of business.

"Since Arthur Andersen, the government has threatened many times, but to my knowledge, this decision has made them more cautious about putting legitimate companies out of business and throwing people out in the street," says Stephen Huggard, senior counsel at Palmer & Dodge in Boston. "It comes up with pharmaceutical cases where companies agree to settlements to avoid indictments since no indicted company would be eligible to participate in Medicare and Medicaid."

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