Wednesday, August 27, 2008

SOX: Constitutional?

For those of you who know and love Sarbanes-Oxley (SOX), this could bear watching.

Sarbanes-Oxley was found constitutional by a 2-to-1 decision in the DC Appeals Court. Hopefully the Supreme Court will take the case.

The question posed by the case, Free Enterprise Fund and Beckstead and Watts, LLP v. Public Company Accounting Oversight Board et al., whether Sarbanes-Oxley's creation of an agency to police auditors of public companies violated the doctrine of separated powers

...The chief constitutional problem with the law is that the five board members at this new agency — the Public Company Accounting Oversight Board of the suit's caption — aren't appointed by the president...Instead the commissioners of the Securities and Exchange Commission, who are presidential appointees, get to do the hiring and firing for the new Oversight Board. And the firing can only be for cause

The O'sight Board is, therefore, a combination of judiciary and executive, according to the thesis.

HT: Lott

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