By Erin Joyce
Embattled accounting firm Arthur Andersen has resigned from further audit work for financial news site TheStreet.com after the publication refused to repudiate comments made by its director and commentator James Cramer during a CNBC broadcast.
In a March 5, 2002 letter to Thomas Clarke, CEO of TheStreet.com, Andersen managing partner Thomas Duffy said the resignation “has been directly caused by what we believe to be inappropriate public comments about our Chief Executive Officer and our firm made by a member of your Board of Directors.”
The dustup came after Cramer, a commentator and founder of TheStreet.com, made negative comments about Andersen and its CEO during his appearance on CNBC’s “America Now,” which he co-hosts.
In a March 6th letter of response to Duffy, Clarke said he found Andersen’s reason for the resignation to be “somewhat mystifying, since you had been informed on February 14, 2002 by audit committee chairman Fred Wilson that the company planned to put its auditing account up for competitive review and had then made arrangements to participate.”
Clarke said it was surprising that Andersen had made repudiation of the comments a condition of their continued business relationship.
Having worked with us for some time, surely Andersen could not imagine we would be willing to or capable of controlling the public utterances of Cramer, a journalist and television personality, the letter continued.
“As you are acutely aware, we are an independent source of unbiased financial journalism and our writers are free to express their opinions.”
“We would think that Andersen, of all companies, would be particularly sensitive to the need to stand behind our professional judgments and not cave to external commercial pressures to modify them.”
In a filing with the Securities and Exchange Committee on Tuesday afternoon, TheStreet.com said Andersen’s engagement would be through upon completion and filing of its 2001 annual report.
TheStreet.com’s board of directors also voted Tuesday to engage consulting firm Ernst & Young LLP as its accountants for 2002.
In an article about it Tuesday, TheStreet.com said Andersen’s resignation came three days before it was to make its presentation to continue as TheStreet.com’s auditor.
Since the collapse of energy trading concern Enron in a wave of accounting scandals, Andersen, which audited Enron’s books, has been struggling to overcome the fallout, including lawsuits and congressional inquiries. Major clients such as Federal Expresss and Delta Air Lines
have pulled their business, while still others are mulling their relationship with the firm.
Press reports have said it may face obstruction of justice charges after members of the firm shredded Enron documents after a federal inquiry into Enron’s accounting procedures was already underway.
