Negotiations are continuing between federal prosecutors and KPMG, and an indictment of the firm for its role in selling tax shelters appears to have been ruled out, according to published reports.

The Big Four firm may avoid the sort of criminal charges that led to the demise of Arthur Andersen, Enron's auditor, but KPMG could still face fines up to $500 million. Reports out of Washington have said in recent weeks that the Bush administration is leery of the demise of another major accounting firm. An independent monitor of the firm's conduct would likely be put in place as part of any deal, and the firm would have to admit guilt publicly.

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