WASHINGTON (AP)— Accounting titan Arthur Andersen LLP has agreed to pay a $7 million civil fine to settle federal regulators' allegations it issued false and misleading audit reports that inflated a company's earnings by more than $1 billion.
In a civil lawsuit filed Tuesday in federal court in Washington, the Securities and Exchange Commission alleged that Andersen "knowingly or recklessly" issued false and misleading audit reports for Waste Management Inc. for the years 1993 through 1996.
Andersen neither admitted to nor denied the allegations in its settlement with the SEC regarding audits of Waste Management, which also was announced Tuesday. The SEC said the fine was the largest ever paid by a Big Five accounting firm in an enforcement action brought by the market watchdog agency.
Under the settlement, Andersen also agreed to the SEC's first anti-fraud injunction against a Big Five firm in more than 20 years and agreed to be censured by the agency.