A federal judge fined accounting firm Andersen $500,000 last night and sentenced it to five years of probation for obstructing justice in a investigation of its client Enron.
US District Judge Melinda Harmon handed down the maximum sentence to the company, which was considered a paragon of accounting integrity before its disintegration.
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"I believe a message must be sent to the auditing community that the destruction of documents will not be tolerated while an investigation is ongoing," Ms Harmon said.
The sentencing comes a year after Enron released a dismal third-quarter earnings report that sparked its rapid spiral into bankruptcy and harsh scrutiny of US corporate accounting practices.
Andersen was indicted in March after it admitted shredding Enron audit records while a US Securities and Exchange Commission inquiry into Enron was under way.
To the end, Andersen maintained that its employees never had any criminal intent to frustrate federal investigators. "We will go to our grave saying we are not guilty," lead Andersen trial lawyer Mr Rusty Hardin said, adding that the firm would appeal the case next week.
But prosecutor Mr Samuel Buell told the court: "This offence is one that was committed in the midst of a stream of failures by Arthur Andersen to live up to its duty as a public auditor".
Ms Harmon noted the Enron offence came a few months after Andersen paid a $7 million fine to settle accounting fraud allegations involving Houston-based trash hauler Waste Management.