New challenge to Sarbanes-Oxley
on Jan 6, 2009 at 4:56 pm
A major new test case on separation-of-powers reached the Supreme Court late Monday, challenging the constitutionality of the new accounting agency that Congress set up following the Enron scandal to oversee the firms that audit the books of corporations. The petition challenging a key feature of the Sarbanes-Oxley law is Free Enterprise Fund, et al., v. Public Company Accounting Oversight Board, et al.; it can be found here. (A docket number has not yet been assigned.)
The new Board subjects auditing firms that review the books of public companies to an array of new regulations. The Board was created to ensure that it was free from political influence. But, as a result, the challengers contend, it puts the Board entirely beyond the control of the President, who neither names nor can remove its members. They are chosen by the Securities and Exchange Commission.
“At every level,” the petition argues, “it is clear that this Court’s review is warranted. the issues presented go to the heart of the relationship between the Legislative and Executive Branches and all agree that this is a ‘case of first impression’ because it involves a wholly unhprecedented model for federal agencies.”
The Board was upheld by a 2-1 vote on the D.C. Circuit Court; rehearing en banc was denied by a 5-4 vote. The Circuit Court panel’s decision and dissent can be found at this link.
