The SEC filed civil charges in federal court Tuesday against Andersen, alleging the firm "knowingly or recklessly issued false and misleading" audit reports for its client, Waste Management, Inc., for the years 1993 through 1996.

In a swift response to the charges, Andersen settled with the SEC and consented to be censured by the agency and to pay a fine of $7 million, the largest ever paid by a Big Five accounting firm in an SEC enforcement action.

Three Andersen partners also agreed to pay a total of $120,000 in civil fines related to the case.

The SEC found that Andersen engaged in "improper professional conduct" and that the firm "knew or was reckless in not knowing that the unqualified audit reports that it issued for the years 1993 through 1996 were materially false and misleading because the audits were not conducted in accordance with GAAS and the financial statements did not conform to GAAP."

Andersen has neither admitted to nor denied the allegations.