Academic

Supreme Court Grants Certiorari in Important Separation of Powers Case

By Calvin Massey

     The Supreme Court has agreed to review the question of whether the Public Company Accounting Oversight Board, a nominally private enterprise created by Congress in the Sarbanes-Oxley Act, is constituted in such a manner as to violate separation of powers principles.  The PCAOB is appointed by the SEC Commissioners and the President is denied any power to supervise or control the PCAOB.  The members of the PCAOB are removable only by the SEC for wilful violations of the Act.  The PCAOB has considerable authority to make regulations that govern accounting firms that audit public companies.  The SEC has almost no authority to control or supervise the actions of the PCAOB.  The questions presented include the following issues:  1) Are the PCAOB members inferior officers?  2) If so, is the SEC a "department" within the meaning of the appointments clause and, if so, are the SEC Commissioners the "head" of that department?  3) Does the complete lack of appointment or removal power of the PCAOB in the President violate separation of powers principles? The DC Circuit upheld the validity of the PCAOB.  The case is Free Enterprise Fund v. PCAOB, 08-861.  SCOTUSBlog has more here.

Full post as published by The Faculty Lounge on May 18, 2009 (boomark / email).