For the past three years, as the litigation worked its way up through the federal appeals process, we’ve been following claims that Sarbane Oxley’s creation of the Public Company Accounting Oversight Board (PCAOB) is an unconstitutional usurpation of executive power (see BVWires # 52-1, #71-4 and #87-2).Just this past Monday, the plaintiffs—a two-person CPA firm in Henderson, NV, representing a class of similar firms (and the small private companies they serve)—enjoyed one small success, however: a divided U.S. Supreme Court struck down key provisions of the PCAOB as violating the Separation of Powers clause—this appears to give the SEC more power to appoint members at will.
“A majority of justices agreed that the current structure of the PCAOB fails to adhere to constitutional provisions governing removal of important officers,” explains a recent Statement by the Competitive Enterprise Institute (CEI), which helped spearhead the litigation. The group believes SOX wastes resources (which it frequently does) and fails to address material accounting issues, as a result—hence the suit in the first place.
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