During oral arguments this week in Free Enterprise Fund v. PCAOB, justices for the U.S. Supreme Court indicated they might not want to tinker with the Public Company Accounting Oversight Board (PCAOB), created by the Sarbanes-Oxley Act of 2002 in the aftermath of the Enron and Worldcom scandals. (For a history of the litigation, initiated nearly three years ago, see BVWire # 52-1 and #71-4). Plaintiffs challenge the Board's constitutionality as too insulated from presidential power, but a recent report from Law.com suggested that legally, it may be difficult to single out the PCAOB as uniquely unconstitutional among the many regulatory agencies and authorities created by Congress.
If the justices decide the accounting board is unconstitutional, however it could force Congress to revisit Sarbanes-Oxley and question the independence of other government agencies, says the Wall Street Journal. The court’s decision may turn on the input of Justice Kennedy, who questioned whether the president’s recommendations to an independent agency are appropriate. Stay tuned…
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