High Court to Hear SOX Challenge
WASHINGTON – The Supreme Court announced Monday it will review a key portion of a 2002 law passed in the wake of corporate accounting scandals.
The case presents an interesting if somewhat weedy constitutional question about presidential authority and the separation of powers.
The lawsuit does not challenge the legitimacy of the Public Company Accounting Oversight Board (PCAOB) or the Sarbanes-Oxley law that created the agency. Rather, the case questions how PCAOB's five member board of officers is appointed.
Critics contend the president is the only person who can constitutionally appoint the board members but Congress created the agency stipulating that its leaders be appointed by the Securities and Exchange Commission.
Lawyers representing a politically active mutual fund and an accounting firm asked the Court to take the case because they argue Congress improperly designated the SEC as the authority to appoint PCAOB's board members. They agree with the dissenting judge in a lower court ruling who said this case is "the most important separation-of powers case regarding the President's appointment
and removal powers to reach the courts in the last 20 years."
The justices will hear the case in the fall.