WASHINGTON (Legal Newsline) - The justices of the U.S. Supreme Court have decided to hear a case challenging the 2002 creation of an agency that oversees the auditors of public companies.
The Competitive Enterprise Institute and the Free Enterprise Fun are challenging the constitutionality of the Public Company Accounting Oversight Board, which was created by the Sarbanes-Oxley Act. The two say the Appointments Clause of the Constitution requires the officers on the PCAOB to be appointed by the President and confirmed by the Senate.
The PCAOB, though, is classified as a private-sector entity. Its five members were appointed by the federal Securities and Exchange Commission.
"The decision by the Supreme Court to hear the case is good news for American investors and prospects for economic recovery, since a victory in this case will give the President an added incentive and ability to adopt policies that foster economic growth," said Hans Bader, CEI's attorney.
"The PCAOB has been very bad for the economy. The biggest beneficiaries of the law have been the big accounting firms that failed to warn the public about Enron and similar scandals, which are charging record fees to help businesses comply with the mountain of red tape created by the PCAOB."
The PCAOB's annual budget of approximately $100 million is funded by issuers.
A three-judge panel in the U.S. Court of Appeals for the District of Columbia Circuit found the PCAOB constitutional in August by a 2-1 vote.
From Legal Newsline: Reach John O'Brien by e-mail at john@legalnewsline.com.