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Industry Brief

Arthur Andersen LLP has agreed to pay $16 million to Enron Corp. creditors to resolve claims that the accounting firm was negligent in auditing and advising the former energy trader. A hearing on the proposed settlement is scheduled for May 14 in U.S. Bankruptcy Court, Southern District of New York (In re Enron Creditors Recovery Corp., 01-16034). If approved, the settlement would end a lawsuit filed in Houston by Enron's creditors that accused the once esteemed accounting firm of approving transactions that manipulated Enron's finances for the benefit of certain executives. Formerly Enron's outside auditor, Arthur Andersen was convicted by a federal jury in 2002 of obstructing an investigation into Enron's demise (see Daily GPI, Oct. 17, 2002). The U.S. Supreme Court overturned that verdict in 2005 (see Daily GPI, June 1, 2005) To date Enron creditors have recovered more than $22 billion, or about 50 cents on the dollar.

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