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Arthur Andersen Decision Means Nothing, Says ex-Prosecutor

June 1, 2005

Tags Legal System

The Sarbanes-Oxley Act, passed into law after the Andersen case was filed, gives the feds the powers they improperly used against Andersen. "in real terms, the opinion likely won't change much in the way business does business in the post-Enron era. "If you're a corporate defendant, you still have to make a deal with [New York Attorney General] Eliot Spitzer or the Justice Dept.," says Stephen Ryan, a partner at Manatt, Phelps & Phillips and a former assistant U.S. attorney. "You still have to suspend your document-destruction program whenever you get a subpoena. Life goes on, frankly, with very little change." (Businessweek)

In the Andersen case, Chief Justice Rehnquist explained that withholding information from the government is not a crime. In fact, it is a right under the Fifth Amendment. "Consider, for instance, a mother who suggests to her son that he invoke his right against compelled self-incrimination," Rehnquist wrote.

Under Sarbanes-Oxley, it is now a crime to destroy a document "in contemplation" of a law enforcement investigation, whether a subpoena has been issued or not. This provision criminalizes any corporate document-retention policy that could be construed as impeding any possible government investigations in the future. A corporate lawyer may not inform employees of their right against self-incrimination, because this may frustrate future prosecutions.

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